Your Home's Equity May Be the Key to Your Next Property Investment

What is equity and how can it be applied?

Purchasing an investment property

Enhancing your home

Investing in the stock market

Launching a business

Buying a new car

Going on a vacation.

It’s essential to understand that not all equity is available for borrowing. This is where the concept of usable equity comes into play. Let’s examine what it is and how you can utilize it to invest in your property. 

What is usable equity?

Most lenders will typically allow you to borrow up to 80% of your home's market value, after deducting the amount you still owe on your mortgage. This is known as your usable equity.

For example, let’s consider this scenario:

Your home is appraised at $600,000, and your mortgage balance is $360,000. Here’s the breakdown:

Property value: $600,000

80% of Property Value: $480,000

minus your mortgage: $360,000.

This means your usable equity amounts to $120,000.

Remember that you can secure a loan exceeding 80% if you opt for Lenders Mortgage Insurance (LMI).