Have you been diligently paying off your home loan for years? If so, you’ve probably built significant equity in your home. Instead of letting it gather proverbial dust, why not use the equity to your advantage?
Here are four tips to use home equity to manage your finances.
Many people dream of giving their home a facelift but hesitate at the expense. However, borrowing against your home is a simple way to bring this dream to life. Also, undertaking renovations is an investment in your home. Any repairs, upgrades or even cosmetic improvements you make to your home will ultimately increase its overall value.
Using equity to purchase a property, invest or start a business is a great investment in your financial future.
Just keep in mind that while you can usually borrow at a great rate, we recommend that you seek advice from the experts at Pearl Financial before making major investment decisions.
We can help you determine if the investment returns are high enough to justify dipping into your home’s equity.
Help your kids start out life debt-free by using your equity to pay for their university degree up front. Doing so can ensure your children avoid costly interest payments associated with HECS loans. You can often receive a significant discount on the degree by paying for it in one lump sum.
Along with your home loan, you may be carrying other debts. This can be anything from a personal loan to a HECS loan and more. Regardless of where the debt comes from, you can use your home equity to wipe out this expense.
However, don’t forget that the funds needed to eliminate your debts are added to your mortgage balance.
So, we recommend that you pay off your debts in a shorter time than your home loan. Otherwise, you could face very high interest payments over the life of your loan.
For more information on using home equity to your advantage, contact the expert team at Pearl Financial today.
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