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Equity, in lending terms, is the net value of your property after taking out existing mortgage balances.
Bearing in mind that lenders adopt a loan to valuation ratio (LVR) of 80% of your property value (90% if you want to pay mortgage insurance or meet certain professional employment criteria), the equity value that a lender applies is scaled back to reflect that 80% LVR.
Take a home worth $750,000 with a mortgage of $350,000 – you have $400,000 in equity built up. Adopting the 80% LVR rule from a lender perspective your usable equity is:
$750,000 x 80% = $600,000, subtract $250,0000 = $250,000.
This equity then allows you to:
When its used to build your wealth, equity can be a very powerful tool.
If you would like an idea of what your equity is and what it means for you in terms of growing your wealth, hit us up for a chat and let’s make this year, the year to get ahead.
Contact Bribie Island Lending - mark@bribieislandlending.com.au
We are based on the beautiful Queensland coast, between the Sunshine Coast & Brisbane and we offer a complimentary home loan broking service.
Make an appointment today for an obligation-free chat, to talk about what you need and how we can help.
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Your borrowing power is one of the most important tools you have as a property investor. Whether you’re looking to refinance, expand your portfolio or unlock equity, knowing where you stand, and how to improve it, can make all the difference.
The Gold Coast’s population is booming, but housing supply isn’t keeping up — creating a major opportunity for property investors. With only a fraction of the required dwellings being approved, rental yields and property values are rising fast.
If you’re looking for somewhere with room to move, a proper sense of peace, and still close enough to commute — Elimbah might just tick every box. It’s one of those underrated spots that locals love and more people are quietly discovering.
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