How to Create Equity In Your Home
What is equity?
Equity is the difference between the balance of your home's mortgage and the market value. This equity can be utilised to better your situation.
A home is probably the most important investment of your life and it is one of the few assets that can increase in value. So how can you optimise and speed up the equity you accrue, here is a guide to get you started.
Renovations
The mortgage on your home is based on the market value of the property when you purchased it. So, one of the easiest ways to build equity is to increase your property value is to renovating! The value of your home can be increased with something as simple as a coat of paint or adding an extension. However, it is important to ensure you are not spending more than you will increase the property of your value. Ensure you make a plan for your renovations. The best value for money is landscaping, extra rooms and updating the kitchen.
Buy In Emerging Suburbs
Do your research!
Emerging suburbs are suburbs that are on the rise. Whether it is that they are being gentrified or are on the outer limits of more expensive suburbs and prime for redevelopment. The suburbs are changing all the time and there is a huge amount of information that allows you to research and understand where the best place to buy.
A little research goes a long way.
Bank Valuations
Banks all have their own processes for valuation. You can arrange valuations from different banks if you believe that they may value your property higher.
If one bank gives you a valuation lower than you expect, you can always request one from another.
Larger Deposit
By saving and paying a larger deposit, you can instantly create equity in your home. The larger the deposit the more equity you are creating. When coupled with any of the other suggestions on this list, you can increase your equity almost immediately.
Build and Expand
One of the easiest ways to increase the value of your property is to expand and build on your property.
Companies like Nemfel Group, offer services like adding extensions or building granny flats.
One of the sure-fire ways to ensure you’re property value will increase is an addition like a granny flat. A granny flat adds extra bedrooms, a kitchen and extra living space. They are a perfect way to make your dollar go further in increasing your equity.
As well as increasing your property value and equity, you can also have the benefit of using your new granny flat to earn some extra cash as either a rental or Air BnB. This can offset the investment of building the granny flat or mortgage payments.
Extra Repayments
Much like laying down a large deposit, every dollar in extra repayments that you make is another dollar in equity earned. Obviously, paying off your mortgage is positive for all aspects of your finances.
*Note. Just make sure you check with your mortgage provider for any restrictions you may have about additional payments.
How You Can Use Your Equity
Building your equity is important. You can use the equity in your home to do several things and improve your financial situation.
Refinance Your Home
Refinancing means you could reduce your payments and free up your money.
Equity for Investment
Speak to your mortgage broker, because you may be able to leverage your equity as a deposit to purchase an investment property.
New Home Deposit
You can use the equity built in your home as a deposit for a new home. Whether this means you upgrade your home and then keep your existing home as an investment property, or move and then sell current your property.
No matter how you want to use your newly fought equity, ZENRG Finance can assist you in ensuring that you get the best deal on your investment property or your refinancing.
Need some help with your a home loan?
Our mortgage brokers are available to help you. Enquire now.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.