Category: House & Home
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Sub category: Loan
13 April 2016

Life After Mortgage

There’s a stigma that comes with buying a house. It makes you feel like you’re “settling down”. It’s when the responsibility of being a grown up kicks in, alongside the dreaded mortgage repayments. However, your home could actually be the key to unlocking the potential in your life – whether it’s renovating your home, paying for your kids’ education or upgrading to a new car.

We’ve talked about accessing equity in your home and how you could build it through renovating, now it’s time for the fun part: how you could spend it.

When to use equity

The easy access and fixed interest rates available through equity may be enticing and create a temptation to borrow regularly. But equity isn’t for everyone and it’s not a solution for every situation. Using the equity in your home means the total amount you owe on your home loan will increase, which will likely result in higher monthly repayments. That means you should think carefully about whether equity is the best way to pay for whatever home improvements or life upgrades you have in mind.

The home equity piñata

We know life doesn’t stop when you get a mortgage. Your bucket list is long and it comes with a price tag. You might be considering talking to a lender about accessing your equity. But if you’re a first timer, you’re probably unsure about how far to take it. In that case, imagine your home as a piñata and the equity as the value (or candy) inside. You’re up to bat, and there’s a few different ways you could approach it…

Level #1: Playing it safe (None)

You’ve got your eye on the target, but you haven’t busted it open. You’d prefer to keep growing the value inside your home for now. You’re interested in what’s inside the piñata and you get your home valued regularly to weigh up your options for the future. You’re starting to make more regular mortgage repayments to reduce your loan balance and increase your equity.

Level #2: Party = Started ($1,000-$20,000)

You’ve broken open the equity piñata just a little bit; enough to upgrade to a family sized car. You’re cautious, but you recognise equity could be a cost effective solution to help you achieve those smaller, but very important, life goals.

Level #3: Solid Hit ($25,000-$200,000)

You’re taking a big swing at the piñata and have a clear view of what you want to achieve with the money. You have a decent amount of equity that you could use for the pie-in-the-sky things on your bucket list. Renovating the house may be the main reason for a serious withdrawal like this, which could add further value to your home in the long run. This level of investment is generally a one off, so speak to your lender to decide if it’s right for you.

 

If you’d like to chat with us about how to access the equity in your home to help achieve your goals, you can call us on 133 464 or fill out this form 

The information is current as at publication. Any advice on this website does not take into account your objectives, financial situation or needs and you should consider whether it is appropriate for you. Deposit products, savings products, credit card and home loan products are issued by ING, a business name of ING Bank (Australia) Limited ABN 24 000 893 292, AFSL and Australian Credit Licence 229823. ING Living Super (which is part of the ING Superannuation Fund ABN 13 355 603 448) is issued by Diversa Trustees Limited ABN 49 006 421 638, AFSL 235153 RSE L0000635. The insurance cover offered by ING Living Super is provided by Metlife Insurance Limited ABN 75 004 274 882, AFSL 238096. ING Home and Contents Insurance is issued by Auto & General Insurance Company Limited (AGIC) ABN 42 111 586 353 AFSL Licence No 285571 as insurer. It is distributed by Auto & General Services Pty Ltd (AGS) ABN 61 003 617 909 AFSL 241411 and by ING as an Authorised Representative AR 1247634 of AGS. All applications for credit are subject to ING's credit approval criteria, and fees and charges apply. You should consider the relevant Product Disclosure Statement, Terms and Conditions, Fees and Limits Schedule, Financial Services Guide, Key Facts Sheet and Credit Guide available at ing.com.au when deciding whether to acquire, or to continue to hold, a product. Before interacting with us via our social media platforms, please take a minute to familiarise yourself with our Social Media User Terms https://www.ing.com.au/pdf/Social_Media_User_Terms.pdf.

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