Kick back and Relax As Your Equity Starts Working For You
If you have been paying your EMIs on time for the past few years, there comes a point when your property’s market value exceeds the balance of your mortgage. That difference is known as “home equity.” Although it might sound confusing, with proper guidance from mortgage specialists, you can use your home equity to make better investments.
While this isn’t common knowledge among borrowers, there’s a decent chance that you’ve built up some reasonable equity in your property by making timely payments over the years. Also, home equity can be an extremely valuable source when it comes to property investment.
Here are three ways you can use your home equity to make better investment decisions.
1. Putting Down the Deposit for Investment Property
If you plan to purchase a home to amp up your real estate investment portfolio, you don’t have to wait to save up funds to put down the deposits. Thanks to the home equity you have accrued over the years, you can use that home equity to put down a deposit for another property.
2. Renovate Your Current Home
After purchasing your dream home, if you have some plans to improve it, your home equity can help turn your wishes and dreams of renovations into reality. Whether you wish to add a bedroom to welcome a new member to your home or upgrade your interiors, you can use your equity in the current property to make all those improvements.
Take precautions not to overdo it and make improvements that cost more than the value they’ll add to your spaces.
3. Investing/ Spending It Outside Property
In addition to purchasing new properties and renovating your existing ones, you can also use your home equity to invest in assets outside of real estate, like shares, mutual funds, and so on. Plus, you can also use your equity to gift yourself a new set of wheels that you have been putting on for quite some time.
Although all of these options involve using your home equity to make more investments or to gift yourself things you have been putting off for years, you should always keep in mind that any equity you spend will add to the cost of the long-term interest on your home loans.
Don’t jump the gun in excitement; look into the pros and cons of tapping into your equity before you make any major financial decision. If you aren’t able to make a concrete decision, you can always seek help from mortgage specialists to help you make the most of your home equity.