In the current economic state, investors are getting creative in order to take advantage of the consistent growth in the Australian housing market. Because the cost of borrowing is inexpensive and the outlook on interest rates looks positive, meaning they will remain at low levels for some time, homeowners are able to borrow against the equity in their homes to purchase new properties for the purpose of long-term investment.
Even though historically low-interest rates are playing a major role in this growing trend, current homeowners are experiencing an increase in their home values as well. In fact, home prices in low and mid-priced regions have increased in market value over 10% just over the last 18 months, and the majority of homeowners would be surprised to know exactly how much equity is available to them. This means that even with a current mortgage balance on a primary residence, homeowners are able to tap into the rapidly growing value of their homes through a loan or an equity line of credit.
Existing Equity for New Investment
Traditionally equity loans have been used to pay down other high-interest debt including credit cards and personal loans, to finance repairs or complete renovations to the home or to pay for a big family holiday, all at an affordable low-interest rate. However, with economic drivers moving the housing market forward at an impressive rate, home equity loans and lines of credit are becoming more popular in the realm of investment properties for homeowners across the country. Most homeowners are unaware of the fact that the equity from a primary residence can easily be used as a deposit for another property, but it is becoming a more attractive choice for homeowners who are looking to invest in a property this year.
If you are interested in investing in another property to take advantage of the booming housing market before home prices grow too high, borrowing against the equity in your home may be a viable option. Low-interest rates provide for low-cost borrowing, and as such, a home equity loan or line of credit may allow you to obtain the deposit needed for the purchase of an additional property. Additionally, if you are not able to buy the new property outright, the new mortgage would also be available at a low-interest rate, keeping the total cost of your investment down. Utilizing the equity in your home can be an affordable and lucrative way to obtain an investment property.
