Did you know, you may be able to use the equity in your home to fund your next big purchase? Here's a quick guide that explains how home equity works and the benefits of using this to get your next loan.
Home equity is the difference between the market value of your property and the amount still owing on your home loan. So if the market value of your home is more than the amount you owe, you may be able to use this to get a loan.
First you'll need to understand the market value of your property.
If you have a home loan with ASB, you can use the estimated value range within ASB Home Central as an initial guide. The valuation used in Home Central may not be appropriate for lending purposes. There are other criteria that need to be met, such as ability to service lending. Another good source is QV. Or, for a more accurate estimate, you can get a registered valuation on your home.
To calculate your equity:
For example, if the market value of your home is $500,000 and your total lending amount is $200,000, then your equity would be $300,000.
If you decide to take out a loan using your equity, please remember the RBNZ loan-to-value ratio (LVR) restrictions may apply. So you may need to have at least 20% equity in your house after new lending is taken out. For investment properties, 30% equity is usually required. However, in some cases a lower level may be possible. Talk to us to see how we can help you.
Remember, you can manage your home loan through ASB Home Central. Trial different loan repayment options before you commit to them to make sure you're doing what's best for you.
Making improvements to your property may increase its value and may increase your equity in your home. However this will depend on how much you borrow to renovate and what the market value of your home is after the improvements.
You can apply for a top-up on your home loan online in FastNet Classic. The application only takes about 10 minutes to complete, and there's no need to visit a branch.
Don't have FastNet Classic internet banking? Call 0800 FAST NET today and we'll help to get you up and running.
ASB’s lending criteria, terms and fees apply. A Low Equity Margin may apply.
The above information is a guide only and should not be relied on as it does not take into account your personal financial situation.