Did you know that you can invest your equity? That’s right — all of that money you’ve built up over the years from owning your home can actually be used to buy an investment property, make home improvements and more.

What exactly is equity?

If you’re still confused, let’s start from the top: According to Mortgage Choice, home equity is defined as the difference between the market value of your property and the amount you have left to pay on your mortgage. If you’ve been a homeowner for years, you likely have a lot of money built up in equity.

Think about it this way: If you have a $150,000 mortgage but your home is now worth $200,000, that means you now have $50,000 in home equity. That’s a lot of money! This amount will increase as you pay down your mortgage, and it can also rise if your property value goes up.

 

Consider a property investment against your home equity.

How can I use my equity to invest?

Now that you understand how valuable home equity is, you don’t just want to let it sit there! You may be surprised to learn the ways you can invest it. Consider the following:

1. Purchase an investment property
According to the National Australia Bank, equity can be used as a form of security with banks so you can borrow more money based on your home equity. This can get your foot in the door when it comes to investing in the real estate market or purchasing a commercial property to start your own business.

2. Renovate your home
Perhaps your equity is so high because you’ve paid a decent amount of your mortgage down. The next best way to increase your equity is to increase your property value, which means putting in the effort to improve your home and turn it into a major investment. Plus, who doesn’t love a freshly renovated living space?

3. Consolidate your debt
Getting your debt down to a manageable level is always a smart move, and consolidating it can be the first step to achieving this. If you have the means to do so — and in this case, you do because it’s with your equity — then take advantage of it! Home equity can consolidate debts like your personal loans and credit cards, according to The Trustee for the Dargan Financial Discretionary Trust.

Learn more about investing your equity with SmartMoney Wealth Management

You may have equity in your home, but how can you access it? The best way to figure out how your home equity should be used is to meet with a trusted advisor. At SmartMoney Wealth Management, we offer personalised financial advice to guide you down the right path when it comes to your finances. One of our team members can run through our investment management services and steer you in the right direction in terms of your home equity. Contact us today to learn more about how we can help.