What Is Equity And How Can I Use It To Buy Investment Property

What is equity?

Equity is similar to cash in a way. It is the difference between the value of a property and what you owe.

For example; say you purchased a home 5 years ago for $500,000 and put down $100,000 deposit. Today the property is worth $600,000 if the debt has remained the same you now have $200,000 in equity.

The bank won’t usually let you use all that equity but they may lend you a certain amount of it, for you to use to purchase another investment property.

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How can you use equity?

Your first step is to go back to your mortgage broker or bank and ask them to order a valuation on your property. If the valuation comes back indicating it is worth more than your original purchase they may release the equity to you. The bank will put the funds into an account for you to access for another property purchase.

How can it help you buy an investment property?

You can use this cash in the bank as a deposit, for stamp duty or any closing costs of purchasing a property. In today’s times it is increasingly difficult to save a $50,000 deposit to purchase your next property, so to be able to tap into your equity to cover those costs makes it much easier to begin or continue your investment journey.

Equity is a tool being used by investors all around Australia.

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Who can you speak to, to learn more about this?

Your best point of contact is your broker or your bank manager. They can re-value your property to find the difference between value and your debt. They can then source how much of that difference you can borrow in order to purchase an investment property.

To book a complimentary strategy session with the team at Pumped on Property click here. We would love to spend some time learning about where you are right now and where you’re looking to go in the future.  

Ben Everingham

About

Ben founded Pumped On Property after building a multi-million dollar property portfolio over a 5 year period. His mission is to show you how to replace your income through property investing so you can do what you love…full time.