Getting cash out from property equity or your home equity can be a great way to fund renovations or get some extra cash for a holiday. An equity loan is another term used to access cash from your home’s value. At Australian Credit and Finance, we can help you to access this cash in a quick and easy manner.
What is cash out?
This is a term used by many Australian lenders to describe when a borrower releases the equity from their home, commonly referred to as a home equity loan.
During the process, the funds are released directly to the borrower rather than the solicitor when the home loan is refinanced. Another option is to have the funds paid out to another lender if the borrower is looking to consolidate debts.
Not all lenders will approve your equity loan request. It largely depends on the amount of equity you are asking to be released.
Some examples of cash out uses include:
- Minor renovations (cosmetic)
- Debt consolidation
- Investing in shares
- Using as a deposit on another property
There are some restrictions in place with regards to accessing equity in your home and these restrictions are different depending on the lender. Our Home Loan Experts can help you navigate through this, so call them on 1300 735 557 if you need to discuss your options.
Criteria for Accessing Home Equity
Below are some of the criteria you’ll need to meet in order to access cash from your home:
- You could borrow up to 90% of the value of your property
- If you want to access $100,000 or less, you could do so without providing evidence of the loan’s purpose (depending on your lender)
- If you want to release up to $1,000,000, you’ll need to provide full evidence of what the loan will be used for
Is taking cash out risky?
From your perspective, it’s probably not a risk, but from the lender’s perspective, it is seen as a risk for a number of reasons.
Generally, the amount you are looking to access is quite a large sum, and this is deposited directly into your bank account or into a line of credit for immediate access. Once this has been processed, the lender no longer has any control over how you use those funds, which means, that even though you might have provided information about how you intend to use the cash, once you have it, you might choose to do something else with it.
The main concern for lenders is that people might access the funds because they are living beyond their means and intend to use the equity to make loan repayments. This is definitely a risk.
Which is why there are restrictions in place, depending on the lender. At Australian Credit and Finance, we will advise you of these restrictions and also provide recommendations on how to best access your equity.
If you’d like to access your home equity or property equity via a home equity loan, get in touch with one of our Home Loan Experts today. Call us on 1300 735 557 to discuss your options.