G’day,
I am having difficulty clarifying how much you can borrow from your equity. I have people telling me two different things so anyone that can clear this up would be much appreciated.Opinion #1- You can borrow 80% of the equity you have in a property. Eg. House value=$100K, Mortgage=$60K, Equity=$40K, You can borrow $32K.
Opinion #2- You can borrow up to 80% of your property value less your mortgage. Eg. House Value=100K, Mortgage=$60K, 80% of 100K=$80K, therfore you can borrow $20K.
Cheers
Hi Waratah,
I think it depends firstly on your bank. (I’m sure some the people who specialise in home loan stuff on the forum will be able to answer better that me!) It may be a good idea to ask your own bank and see what they reckon for you own circumstances.
Secondly it depends on how much risk you want, as a higher LVR will increase your debt riskiness. Eg. if you have borrowed 95% of the value of your home, which some banks allow I am told, then you run a higher risk of everything going pear-shaped.
I think that borrowing up to 80% of the value of your home (less your mortgage) is generally considered to be ok. (Of course depending on the circumstances).
Kelly
P.s. I must admit, I have never heard of Opinion 1 (borrowing 80% of the equity value).option 2
Terryw
Discover Home Loans
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Send an email to get my newsletter.Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Terry speaks the truth as usual …
Simon Macks
Residential and Commercial Finance Broker
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0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
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