If you are already the owner of a home you can borrow against its equity. The term ‘Equity’ means the difference between what your property is currently worth and what you currently owe for instance if your home is worth $400,000 and you currently have paid off $200,000, you still have $200,000 equity tied up in your home. You can then borrow against this equity in order to invest in other property, shares or renovate your home.


With an equity home loan you get a sort of line of credit on your mortgage. The credit from this can then be used and taken in either stages or the full amount which makes it great for investing in property. Exactly, how much you borrow will depend on what your situation is i.e. your income, assets, and borrowings. If your equity is being used for an investment property then your current and new property value will need to be assessed.


It can take quite a bit of time to save for renovations or putting a deposit down on your new rental property. Getting a home equity loan will spend up the process so that you can take the steps you desire immediately. However, like all debt this too has to be managed carefully in order to minimize risks and maximize your investment.