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What can you do with your home equity?

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What can you do with your home equity? 


For most Australian households, much of their wealth is tied up in their family home. With home prices rising substantially over the past decade, homeowners are often sitting on a large amount of equity that they could use for other things.


Equity is the difference between the value of your property and the amount of debt (mortgage) that is still owed. For example, if you own a property that is worth $500,000 and you have a $200,000 mortgage, then your equity is worth $300,000. You are able to access that equity and potentially use the money to invest in things like another property.


Here are two options for your home equity.

Investment property

The most common reason a homeowner would access the equity in their home is to use the funds as a deposit on another home.   If you’re looking to build a property portfolio that will provide a passive income in the future, or as a tool to build wealth, using equity in your home can be a very powerful way to do it.


Renovation

Another clever way to use equity is to tap into it to pay for a home renovation. By refinancing your home loan, you can potentially use the funds to go out and complete a renovation on your property.


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