Home Equity Top Up
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Access Cash Via Home Equity Loans & Top Up Mortgages
If you are looking to cash out any added value in your home, you need to know the ins and outs of the home equity loan business. You need to know what it means to get a top up mortgage and you need to consider the timing of the added financial liability. However, if you are in need of the extra cash, a home equity loan can give you’re the financial flexibility to pay off your bills, invest in the improvements you need on your home, retire comfortably, or pay off medical, students bills, or any other life event. For an in depth look at this type of cash access, check out the descriptions below and reach out to your local New Zealand mortgage broker for more personalized information and details on the offers currently available to you.
What is home equity?
Let’s start off with a brief description of home equity. Home equity is the value of your home in current dollars that isn’t held under a mortgage. To know what a home equity loan is, you need to understand how home equity can affect the value of your home and the financing you can get from a bank. If you are new to your home, most likely, you don’t have as much home equity as you think. However, if you have been there for a while, or the area has increased in value recently, you may have value in your home that has gone untapped.
Your home has value. It is an investment. That is why renting isn’t as desirable as home ownership. In home ownership, you not only own your home, you own all of the value that it has. However, don’t equate your original purchase price with home value. The first thing to do when discussing home equity is figuring out what your home value is in today’s market. Visit some of the online home sales sites and find homes in your area that are similar in condition, lot size, and square meters. footage . There are lots of items that you will need to consider, but this will give you a great back of the hand estimation on the current value of your home. Once you have a solid estimate, look back at your purchase price. This can show how your home has increased in value since you bought the house.
Next, you will need to check the current mortgage balance on your home. With some simple subtraction you can guess what value your home has that could be tapped for cash in your pocket. If you have completely paid your mortgage off, then you can tap into up to 80% of your entire home’s appraised value. Depending on the non-mortgaged value you could have any proportionate amount available. Let’s do a simple example.
Assume that you bought your home ten years ago for 300K. Further, say you can find comparable homes in your area now selling for for 60350K (we will assume that your house raised to this value over time). Also, maybe you have 150K left on your original mortgage. To figure out the potential access to equitycurrent home value, all you need to do is to subtract 150K from 80% of your current value of $600350K (you are allowed up to 80% of your appraised value, an appraisal will be used, but we will assume for now) and 150K. Based on this simple approach, you could estimate that you have potentially total $480130K less $150K owed in home equity totaling $330K that you could tap into through a home equity loan or top up mortgage, which can be used either to pay off their life event bills or as a deposit to purchase an investment property.
Can I have more than one mortgage on a house?
Yes, you will continue even though you may be paying off your primary mortgage, and if you have sufficient value left in your home, you can get a second mortgage called a home equity or top up mortgage. These second mortgage will tap into burden you the remaining home’s equity that has been gained over time through appreciation or from what you have already paid off through the first mortgage. you have on your home as described the in the prior section. This second mortgage is commonly called a home equity loan or a top up mortgage.
However, it is best to speak with a mortgage broker about your specific financial situation. To get a home equity loan, you need to have a certain percentage of value left in your home. Often the top up mortgage or home equity mortgage will only allow you to borrow on the home’s value up to 80% of the appraised value a certain percent, say 90% or something similar. For every 100K in appraised value, you will have 80K that can be borrowed. If you have a million-dollar home, you can borrow up to 800,000Think back to the prior example. Don’t forget to subtract what you owe from a previous mortgage, but This would mean that even though the home was worth around 350K, you would only be able to borrow on the equity or burden the home up to 315K. That is $800200K of total borrowing power would drop to 165K, depending on the appraisal and financing bank. A mortgage broker can work you through all of the details and set you up with the terms that best fit your needs and the current value of your home.
What are the Benefits of Home Equity Loans and Top Up Mortgages?
The benefits of a home equity loan or a top up loan are mainly in the access to cash for your financial needs. You don’t need to borrow all of the equity left in your home. Rather Instead, your home equity loan or top up loan are usually allowed to be between a minimum borrowing value and a high percentage of the value of your home. This lets you choose what you need and how you want to use it.
A second mortgage on your home is a secured loan. This means that the bank or another lender will use your home as collateral to secure the loan. Secured mortgage loans are commonly cheaper due to the lower interest rates when as compared to personal loans or other types of unsecured loans, as it is a second mortgage, the rates on a home equity loan will likely be higher than the first mortgage but still much better than any personal loan.
Standardized Monthly Payments
Second mortgages work similarly to just like first mortgages. This means that you will have a set monthly payment that can be deducted straight from your bank account just like any other mortgage. You can plan out your finances for the year knowing that the payments won’t change.
Strong Cash Volumes
Because you aren’t getting a loan to buy the house, the bank will be cutting you a check for the home equity loan amount. You will have instant access to the full value immediately. When you need the cash, you will have it for any type of bills or necessary repairs. When you are ready to investigate the true value of your home’s equity, reach out to your trusted mortgage broker today.