Equity Release allows you to access equity from your existing home or investment properties.
When considering your equity available, a valuation will allow you to understand the potential can then potentially allow you to access up to 80% of the property value. It is important to understand, 2 MAJOR points before planning your next move.
One, equity is not your money. Equity is only your money if you sell property or can afford further funding to draw don on your equity, increasing your loan. A huge mistake is when clients may begin planning their next purchase based on the amount of equity they have, assuming it is easily accessible whilst expecting to fully fund their next purchase also with further debt. Ensure to research your totally borrowing capacity and make sure you can indeed access your equity as well as fund the remaining amount needed on the next purchase.
Two, your borrowing capacity (Slightly different with each lender) is your total capacity. There for if you jump the gun and access equity funding for other projects for example renovations, holidays or take out a new car loan or credit card, your borrowing capacity then goes down.
for example, if your borrowing capacity is $500,000 for a new investment property however you take $100,000 out of your existing property equity, your borrowing capacity is now $400,000 for a new purchase.