Home Equity Loans

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Home Equity Loans

At Pioneer, our focus is on helping customers achieve their financial goals. As a home owner, an equity loan could be your pathway to making the purchase you have been working towards, without the cash outlay.

If you’re interested in building a property investment portfolio, or would like to make a significant purchase, then a home equity loan could be perfect for you. As you increase the equity in your current home by paying off your mortgage, you could be putting yourself in a stronger position to invest or access funds. We have helped Australian’s just like you to purchase more property or make lifestyle purchases without the need to dig into personal savings.

What is a Home Equity Loan?

A home equity loan is like a credit card but much, much cheaper. You can withdraw funds from the Equity Loan to purchase things like cars, boats, holidays, home renovations and much more. The catch is the Bank registers an interest in your property for the borrowed amount just like they do for a normal home loan. This gives them the guarantee of repayment and is why they can afford to offer interest rates much lower that you would typically see for personal finance.

A common use for home equity loans is for investing. Instead of using personal savings for your deposit, a home equity loan allows you to purchase a second mortgage for a new property secured by an asset, such as your existing property. By using your home equity line of credit, you could increase the size of your portfolio, or make a lifestyle purchase.

Here is a scenario from one of our past customers. Ben wants to purchase an investment property for $400,000. Traditionally, he would need a minimum deposit of $40,000. However, Ben has the following equity in his current home:

  • Current Property Value: $540,000
  • Outstanding to pay on mortgage: $340,000
  • Current Equity: $200,000 ($540,000 - $340,000)

Instead of having to save up $40,000 for a deposit, he is able to take this equity from the amount he owns on his existing home. This $40,000 is essentially redrawn from your current mortgage, meaning you now owe $380,000 on your mortgage for the house you are currently living in. Your equity in this house is now $160,000, although this drop in equity is now been moved to an increase in equity in your investment property.

 

 

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Why is a Home Equity Loan right for you?

Using home equity to purchase your next property requires that you already own your own home, or have an existing mortgage. To take advantage of your home’s equity, you will need equity that is at least equal to the deposit required to secure your next property. For example, say the deposit for your new property is $40,000; you will be required to have at least $40,000 or more equity in your current home as security.

*Figures used as examples only. To see if you qualify, speak to one of our friendly team members today.

Benefits of using home equity:

  • Make a purchase without touching your personal savings
  • Leverage your equity to secure an investment property
  • Access a better interest rate
    • Access to a secure personal loan
    • Achieve your financial goals

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    See what our customers have to say!

     

    • customer experienceJohn R, VIC
      I'd like to thank you for all the help you've given me. I know that I made it difficult for you at times but you handled it all very professionally. It was very helpful that you were so knowledgeable about every aspect of this process, including all the legal procedures.
    • customer experienceThe Conway Family, WA
      We would love to say a massive thank you for all the help and support you have provided in the purchasing of our lovely home. Buying a house is apparently one of the most stressful things you can do in a lifetime; well not in this lifetime thanks to you! We can honestly say that there was not one minute of stress and your efficiency, expertise and advice were second to none.

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