WEALTH HUB JOURNAL

Unlocking the Potential of Your Home: Using Equity to Invest in Property with Wealth Hub Australia

Introduction: Combining Tax Benefits and Saving Strategies

Investing in property presents unique opportunities and challenges. It’s not just about owning a piece of real estate; it’s about leveraging assets wisely. At Wealth Hub Australia, we understand the aspirations of investors to blend the tax minimisation advantages of buying an investment property without dipping into their savings. Using equity in your existing home may seem complex, but with the right understanding and guidance, it can be a powerful tool for achieving rewarding returns.

Understanding Equity: Your Hidden Asset

Equity is the financial buffer between your home’s market value and the remaining balance of your mortgage. It’s like an invisible savings account that grows as you pay off your mortgage and as your property appreciates in value. If you’ve been a homeowner for some time, you might be sitting on a significant amount of equity without even realising it.

The Role of Equity in Investment

Imagine you have your eyes on an investment property valued at $400,000. Including legal fees, stamp duty, and insurance, the total cost might be around $420,000. Let’s assume you’re eligible for a loan covering 90% of the property’s market value. Whilst you might need to pay Lenders Mortgage Insurance (LMI), the bank’s lending of approx. $378,000 means you only need an additional $42,000 for the deposit and upfront expenses. This is where your equity plays a crucial role.

Suppose your home is valued at $500,000 with a mortgage balance of $300,000. The $200,000 difference is your equity. As investors, you can access up to 80% of this equity without incurring LMI, effectively using your home as a financial springboard.

Strategies to Leverage Your Equity with Wealth Hub Australia

1. Refinancing Your Existing Mortgage: This approach allows you to combine your home and investment, using your existing home as collateral to secure a new loan and draw a lump sum.
2. Establishing a Line of Credit Against Your Equity: This method provides flexibility in accessing equity as needed. It even allows you to obtain a second loan from a different lender, separating the titles of your properties for enhanced flexibility and potential for future purchases.

These strategies open doors to what we at Wealth Hub Australia refer to as the dual-purchase strategy. It has empowered many of our clients to achieve significant success without compromising on opportunity cost.

Choosing the Right Path

Selecting the best strategy depends on your individual circumstances, financial goals, and risk tolerance. It’s not just about acquiring a property but planning strategically and understanding how to navigate tax, charges, and lending conditions.

That’s where the expertise of Wealth Hub Australia can be invaluable. Our understanding of equity release strategies can help you combine the benefits of investment with maximising tax advantages, all without impacting your day-to-day lifestyle.

Get Started with Wealth Hub Australia Today

Equity is more than just a financial term; it’s a gateway to growing your wealth. For more insights and personalised advice on leveraging your equity, visit Wealth Hub Australia and request a complimentary, 45-minute consultation with a Senior Property Wealth Planner valued at $495.

*Our officers, employees, agents, and associates believe that the information and material contained in this handbook is correct at the time of printing but do not guarantee or warrant the accuracy or currency of that information and material. To the maximum extent permitted by law, our officers, employees, agents, and associates disclaim all responsibility for any loss or damage which any person may suffer from reliance on the information and material contained in this handbook, or any opinion, conclusion, or recommendation in the information and material, whether the loss or damage is caused by any fault or negligence on the part of our officers, employees, agents, and associates or otherwise. The information relating to the law in this handbook is intended only as a summary and general overview on matters of interest. It is not intended to be comprehensive, nor does it constitute legal, financial, or taxation advice. Whilst our officers, employees, agents, and associates believe that such information is correct and current at the time of printing, we do not guarantee its accuracy or currency. Many factors unknown to us may affect the applicability of any statement or comment that we make to your particular circumstances, and consequently you should seek appropriate legal advice from a qualified legal practitioner before acting or relying on any of the information contained in this handbook. The information contained in the handbook is of a general nature and does not take into account your objectives, financial situation, or needs. Before acting on any of the information, you should consider its appropriateness, having regard to your own objectives, financial situation, and needs.*