Results shown are for illustrative purposes only and are limited to the accuracy of the information provided. Before acting on this calculation you should seek professional advice.Īny calculation made by you using this calculator is intended as a guide. Our lending criteria and basis upon which we assess what you can afford may change at any time without notice. Your borrowing power amount may be different when you complete a full application and we capture all details relevant to our lending criteria. This calculation is not an offer of credit, but an estimate only based on the information you provided of the loan and monthly repayments required to purchase your next property and it does not include all applicable fees. The calculation is not an offer of Credit. The results generated by this calculator are subject to the disclosures below. The purpose of this calculator is to provide you with general information about the amount of usable equity you have in your property and the estimated loan and monthly repayments required to purchase your next home based on the information you provided. The above rates exclude any LVR discounts available for new loans. That is of course not something in your direct control, although it’s a good idea to think strategically about where prices are most likely to go up when researching and buying property in the first place. If the market works in your favour, you may find that you also build equity through asset appreciation – or in other words, an increase in the market value of your property. And yes, you can use existing equity to further increase equity, making it a virtuous cycle of sorts. You can also boost equity by increasing the value of your home proactively – this can be through renovations, extensions or cosmetic improvements. If you have a fixed rate loan, keep in mind that there’s a limit on the total amount of additional repayments you can make before break costs apply. The most obvious one is paying down your mortgage with additional repayments, which reduces the amount you owe on your loan while increasing the portion of the property that you actually own. There are some smart ways in which equity can be bumped up. Learn more about how to unlock equity here. Most lenders require you to provide proof of your financial situation to correctly understand your borrowing power and also how you’re planning to spend the money when unlocking home equity, to ensure that it is being used responsibly. The flipside is that using your equity for purchases or short-term projects may increase the term of the loan, which means you may pay more interest over the loan’s life than if you were to use a personal loan with a fixed term. One of the main benefits of using equity for big expenses is that you are still charged home loan interest rates for the debt, which may be lower than other loans. Adding these balances to your home loan may result in you paying more interest on the debts over the life of the loan. Also note that using equity to pay off other debts could mean you have a longer loan term than if you were to focus on paying down those debt accounts individually. Keep in mind that your bank may have limits and conditions in place for how you use your equity, depending on the purpose. Fund lifestyle expenses such as a holiday.Cover major expenses, such as medical bills, education or a new car.Pay off other debts like loans or credit card bills.Invest in shares, bonds, mutual funds or similar financial instruments. One common use of equity is towards a deposit for a new property.
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