Remodelling? Consider a Home Equity Loan

Recently updated on January 11th, 2023 at 11:25 am

Ready for a reno!? The answer for many property-owners right now is: ‘yes!’ Which is why many borrowers are considering alternative ways to obtain funds, which increasingly includes assessing the feasibility of a home equity loan.

What is a home equity loan?

A home equity loan is sometimes referred to as an equity loan, home equity instalment loan or second mortgage. It allows you to borrow money against the equity you have in your home (equity is the difference between the current ‘fair market value’ of your home, less any mortgages or other loans secured by the property).

A short-term home equity loan can be obtained if you have an existing mortgage, or own your home outright. For example, if you have a mortgage loan of 50% of the current value of your home, a short-term home equity loan allows you to access some portion of the equity you own (being the other 40% of the current value). It is important to bear in mind that there will be a limit to the amount of equity you can access or borrow against. Generally, 70% of the property value minus any existing debt secured against the property.

How much can you borrow?

A home equity loan allows you to access cash for big projects or large purchases by using your home equity.

A home equity loan can be obtained if you have an existing mortgage, or own your home outright. For example, if you have a mortgage loan of 50% of the current value of your home, a short-term home equity loan allows you to access some portion of the equity you own (being the other 40% of the current value). It is important to bear in mind that there will be a limit to the amount of equity you can access or borrow against. Generally, 70% of the property value minus any existing debt secured against the property.

Benefits of a home equity loan for renovations

Here are some reasons that borrowers choose a home equity loan to fund renovations:

·Quick access to a lump sum

A home equity loan is usually provided in a lump sum.

·Lower interest rate

Equity loans usually have lower interest rates than other loan options, such as personal loans or credit cards.

·Tax deductible

Speak to your accountant to see if the money used to improve your house can become tax-deductible.

·Increases the value of your home

Home improvements not only make your house more comfortable, but can also contribute to making it more valuable!

How can you qualify for a home equity loan?

Loan requirements vary from lender to lender. Non-bank, specialist, and private lenders tend to be more flexible in their loan criteria, terms and application process than traditional institutions.

How can you apply for a home equity loan?

At Mango Credit, you can submit an enquiry by phone, email or apply online. Upon receiving your enquiry or application, we email an indicative quote that details the interest rates, costs, loan structure and document requirements. If you agree with the proposal, we will then issue a formal and more detailed letter of offer. You return the signed proposal with the required documents, and we ask our solicitors to issue security documents or order a valuation if needed. Once we receive the security documents, we settle by electronic transfer of funds. Click here to apply for a short-term home equity loan.

Why choose Mango Credit for your home equity loan

Since 2001, Mango Credit & Mango Mortgages have helped thousands of Australians get out of a bind and explore great opportunities through short-term financing solutions. We have a team of qualified, licensed and experienced lending experts that specialise in credit, mortgage and fund management, which allow us to give tailored lending solutions to our clients. Our solutions are flexible and achievable for all, even to borrowers with complicated income streams or affected credit history.

We are renowned for our flexible underwriting and no credit check or income assessment. We also provide full transparency when it comes to fees, interest rates, costs and charges. Any additional costs, like late payments, are all discussed upfront.

Key takeaway

A home equity loan uses the equity in your home to give you access to funds. A home equity loan is commonly used for renovations to both make the property more comfortable and increase its value. Non-bank, specialist, and private lenders tend to be more flexible in their loan criteria, terms and application process than traditional institutions.

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