What Is Equity and How Does It Work in Victoria?
- Samantha Keramidas
- 12 minutes ago
- 3 min read
Equity is a powerful financial tool that homeowners in Victoria can leverage to build wealth, invest, or improve their financial position. But what exactly is equity, and how does it work?
Understanding Equity
In simple terms, equity is the difference between the current market value of your property and the amount you owe on your mortgage. For example, if your home is worth $800,000 and you still owe $500,000, your equity is $300,000.
Equity grows over time as you pay down your mortgage and as property values increase. Homeowners can use this equity to secure loans, renovate their homes, or invest in additional properties.
How to Access Your Equity
In Victoria, there are several ways to access your home equity:
Refinancing Your Mortgage – This involves replacing your existing mortgage with a new one, often at a different rate, and borrowing additional funds based on your available equity.
Home Equity Loan – A separate loan that allows you to borrow against the equity in your property while keeping your original mortgage unchanged.
Line of Credit – A flexible option where you can borrow funds up to a pre-approved limit, similar to a credit card, using your equity as security.
Equity Release (Reverse Mortgage) – Available for older homeowners, this option allows you to convert some of your home’s equity into cash while continuing to live in the property.
How Much Equity Can You Access?
Lenders typically allow you to borrow up to 80% of your home’s value, minus any outstanding mortgage. Using the previous example, if your home is worth $800,000, 80% of that is $640,000. If you still owe $500,000, you could potentially access $140,000 in equity.
However, borrowing against your equity comes with responsibilities. You need to ensure you can meet the repayment terms, and lenders will assess your financial situation before approving an equity loan.
Using Equity Wisely
Homeowners in Victoria often use their equity for:
Investing in property – Using equity as a deposit for an investment property can help grow your wealth.
Home renovations – Upgrading your home can increase its value over time.
Debt consolidation – Using equity to pay off high-interest debts can reduce your overall repayments.
Funding major expenses – Some people use equity to purchase a vehicle, holidays or personal use.
Getting Expert Advice
Accessing your home equity requires careful financial planning. Steve Keramidas, a trusted mortgage broker, can help you navigate the process, find the best loan options, and ensure you make informed decisions. Whether you’re looking to refinance, invest, or renovate, expert advice can make all the difference.
If you’re a homeowner in Victoria and want to explore how to make the most of your equity, reach out to a mortgage professional like Steve Keramidas to guide you through the process.
Disclaimer: This article provides general information only and may not reflect the publisher’s opinion. None of the authors, the publisher or their employees are liable for any inaccuracies, errors or omissions in the publication or any change to information in the publication. This publication or any part of it may be reproduced only with the publisher’s prior permission. It was prepared without taking into account your objectives, financial situation or needs. Please consult your financial adviser, broker or accountant before acting on information in this publication.
