Is an Equity Loan Right for You?
Recently updated on January 10th, 2023 at 05:29 pm
Do you need some additional funds? If you have owned your home for a few years, you may have accumulated some reasonable equity, which you can use for a variety of purposes, such as purchasing a property, doing property renovations or making debt repayments.
The basics of home equity
Home equity is defined as the total market value of a homeowner’s unencumbered interest in their home. This means that home equity is the current market value of the property less any outstanding balance of all liens (mortgages) attached to that property.
Your home equity increases as you pay your mortgage and when the value of your home increases. Renovations also add value to your home, which helps increase your equity.
Equity is an asset that can be withdrawn. A home equity loan enables you to secure funding by using your home equity. For example, you can use your built-up equity in the form of a home equity loan for a deposit for a new loan, contribute towards purchasing a new property or pay for renovations.
Tapping into your equity
One of the few advantages of owning a home is that even if your home is not yet fully repaid, you can tap into its equity. This can be done through a home equity loan, where you use your home equity as security or collateral to borrow some money.
Home equity loans
A home equity loan is provided in a lump sum, which is why this loan type is often used for deposits or pay for substantial expenses. Interest rates are usually fixed and run over a relatively short term (up to 12 months).
Benefits of a home equity loan
• Lower interests
As your house value secures the loan, home equity loans typically have lower interest rates than other loan products, such as credit cards or personal loans. Also, home equity loans commonly have a fixed interest rate.
• Easy approval
Borrowers usually get approval for a home equity loan easier than other home loan products – particularly from a non-bank lender.
• Unlock the value of your home
Home equities enable borrowers to benefit from the equity in their property and use it for other purposes, such as home renovations or investments.
How to apply for an equity loan
Getting short-term funding is simple at Mango Credit. In addition to equity loans, we also offer caveat loans, bridging loans and second mortgage loans. These funding solutions are all tailored to meet your needs and circumstances.
At Mango Credit, we offer loans within the range of $25K – $500K+ across Australia. We require minimal documentation and no credit check or income assessment. Our loans are real estate-backed, and we provide flexible underwriting. We make loan applications simple and easy. Click here to apply for a short-term equity loan.
Key takeaway
An equity loan can be a great way to obtain additional funds for personal or business use. Your mortgage broker is best placed to ensure you’re getting the most suitable loan for your requirements.
Mango Credit
Yanis Derums is the Founder and Director of Mango Credit– a leading private lender specialising in bridging loans for personal use and business short term loans for commercial and/ or investment purposes. Yanis has extensive experience with financial analysis, credit assessment, product structuring, and general business management