Are you missing the chance to build wealth through your home's equity?

  • Property price increases are boosting home equity
  • Home owners can explore property investment
  • Borrowing from your equity can cover the deposit

According to the ATO, more than 2.2 million Australians own at least one investment property. The latest data suggests that more than 2.1 million Australians own at least one investment property. Whilst you may not have thought about buying an investment property – the equity you have in your home might make it possible.

Property prices have increased across many parts of the country. CoreLogic data reveals Australian dwelling values rose 13.5% in the 2020-21 financial year, the highest annual growth rate since April 2004.

Rising property values increase home equity

BankVic Lending Specialist Jayne Kukuruzovic says rising property values mean many homeowners have built up enough equity to explore purchasing an investment.

“If the value of your home has increased compared to the amount owing on your mortgage, there may be equity you can access. Depending on your financial circumstances, you may borrow from this equity to pay the deposit on an investment property,” Jayne says.

“Ideally, the available equity will be enough to provide a 20% deposit on the investment property."

How does equity for an investment property work?

Imagine you bought a property for $500,000 five years ago, with a mortgage of $400,000 – 80% of the home’s value at that time. If your mortgage is now $380,000 and your home is currently valued at $600,000, you owe 63% of the home’s value. This means you may be able to borrow a further $100,000 (taking your mortgage back up to 80% of your home’s value) and use these funds as the deposit for an investment.

Will I qualify?

Qualifying for additional lending means passing certain affordability criteria.

“BankVic is the bank for police, emergency services and health workers. For many of these professionals, the pandemic has meant more work and higher earnings in the form of overtime or penalty rates,” Jayne says.

“This extra income is helping many of our members to qualify for an investment property loan."

Starting the conversation

Jayne says borrowers wishing to purchase an investment property using their home equity should make an appointment with a BankVic lender (in-branch or mobile) or call 13 63 73.

“We work with members and new lenders to assess whether they have enough equity in their current property and whether they qualify for additional lending for another property.”

Our home loan specialists can help you to explore your options. Get in touch today.

Source: https://data.gov.au/data/dataset/taxation-statistics-2017-18/resource/af0f36a2-98bd-4ee5-aa92-011f4502e9ed?view_id=3d74b35f-489c-4b8e-bc21-42013e5cfd77 Normal lending criteria applies to all loan applications. The information in this article is general in nature and does not take into account your personal situation or needs. Please consider whether it is appropriate for you before acting on this information.