Using the Equity in Your Home to Fund Life’s Big (and Small) Goals

If you’ve owned your home for a few years, there’s a good chance you’ve built up equity without even realising it. Equity is the difference between your home’s current market value and what you still owe on the mortgage.

This equity you’ve created can be used to fund a range of other things you may need. For example, instead of taking out a personal loan at a higher interest rate, you may be able to use your home’s equity to update your kitchen, furnish your home, take a much-needed holiday, pay off debts, or even invest in shares.

Using your equity to fund other projects can be a smart financial move, but there is a condition – it must be used wisely. With the right strategy, you’ll pay less interest overall and keep your financial goals on track.

Why Use Equity Instead of a Personal Loan or Another Loan?

Personal loans and credit cards often come with interest rates that are double or with some lenders, even triple normal home loan rates. By refinancing your home loan to release some of your equity, you could fund your plans at a much lower interest rate, potentially saving thousands over the life of the loan.

You can also choose a structure that fits your needs, from keeping repayments manageable, to setting a shorter term for the loan so that you clear the debt faster.

Ways to use your home equity

Here are some of the most popular (and financially sound) ways my clients use equity:

Renovating your kitchen

A kitchen upgrade can add significant value to your home while making it a better space to live in. Using equity means you can complete the work now and enjoy the new kitchen, without being subject to high-interest credit.

Buying furniture

Does your home need some freshening up with new furniture? Using equity to fund quality, long-lasting furniture means you avoid retailer finance plans with steep interest rates.

Taking a holiday

Life is about balance, and sometimes a family getaway is just what’s needed. If you use equity for travel, keep the loan term short or pay off this part of the debt as soon as you can, so you’re not paying for the holiday long after the memories fade.

Paying off other debt

Consolidating personal loans, car loans, or credit cards and even tax debt into your home loan can reduce the interest you’re paying and simplify your finances to one easy repayment. Just make sure you keep your repayment amount the same (or higher) so you clear the debt sooner.

Investing in shares

If you’re comfortable with investment risk, using a portion of your equity to build a diversified share portfolio can help grow your wealth over time. It’s important to get professional advice and have a clear strategy in place.

Using Equity Wisely

While tapping into your home equity can be smart, it’s not free money- it’s still a loan you need to repay. The key is to:

• Borrow only what you need.
• Keep the loan term as short as possible for non-property purchases.
• Maintain (or increase) repayments to avoid dragging out the debt.
• Work with a mortgage broker (me!) to compare lenders, features, and rates.

By structuring your loan the right way, you’ll reduce the overall interest you pay and free up more cashflow for your lifestyle.

How I Can Help

With access to over 50 lenders, I’ll find a competitive home loan or refinancing option that fits your goals, whether that’s renovating, consolidating debt, or investing. I’ll take care of the paperwork, negotiate with lenders, and make sure you understand the features available to you, such as redraw facilities and offset accounts, so your money is always working hard for you.

Using your home equity can open the door to opportunities without the sting of high-interest debt. Let’s explore your options together and make your equity work for you, so you can enjoy life now while staying financially secure for the future.

Give me a call on 0430 511 500   or email me glen@keystonemortgagebrokers.com.au to explore the possibilities.