How to Release Equity in Your Maroochydore Home

If you own a home in Maroochydore, you may be sitting on more usable equity than you think.

Equity is the gap between what your home is worth and what you still owe. Refinancing to release equity lets you borrow part of that gap for something that matters to your family, such as a renovation, clearing debts or a deposit on an investment. It also adds to your debt, so it is worth taking your time.

What Does It Mean to Release Equity From Your Home?

Releasing equity means borrowing against the value your home has built up, usually by refinancing to a larger loan or adding a loan split to your existing one. The extra money comes to you as cash, and your total debt goes up by the same amount.

Maroochydore is also seeing a $2.5 billion CBD transformation under way. Medians are only a guide, though. A lender will value your actual home, and that number is what counts.

How Much Equity Can You Actually Access?

Your usable equity is the amount you can borrow while keeping your loan within a lender's limit, which is often 80% of your home's value. This is called the loan to value ratio, or LVR.

As an example, say your home is valued at $1,000,000 and you owe $500,000. At an 80% LVR, the lender's limit is $800,000. That leaves $300,000 of usable equity. Borrowing above 80% can be possible with some lenders, but it often means lenders mortgage insurance or a higher rate. Your income also matters, because a lender must be satisfied you can afford the larger loan. Our borrowing capacity page explains how that assessment works.

Can You Refinance to Release Equity and Still Get a Lower Rate?

Sometimes you can, but not always. A refinance can lower your rate and release equity together, though the rate you are offered depends on your deposit size, your LVR and your lender.

There are costs to weigh up. Switching lenders can involve discharge fees, application fees and, if you leave a fixed rate early, break costs. If your fixed term is ending soon, our fixed rate expiry page covers timing. If you are not sure your current loan is still working for you, a loan health check is a gentle place to start.

Example: Releasing Equity to Clear Debts and Fund a Renovation

Consider a Maroochydore couple with two young kids. Their home is valued at $1,200,000 and they owe $600,000. They also carry a $25,000 car loan and $15,000 on credit cards, and they want a $60,000 bathroom and kitchen update.

At an 80% LVR, their limit is $960,000, so they have $360,000 of usable equity. They need $100,000 in total. Their new loan would be $700,000.

As an illustration only, at 6.75% p.a. over 30 years, repayments on $700,000 come to roughly $4,540 per month. The renovation and debts are now rolled into the one loan, so the card and car repayments disappear. The trade-off is that the debts are now spread over a much longer term, so they can cost more in interest overall. To limit that, the couple asked to make extra repayments, aiming to pay off the car and card portion first. The outcome was one repayment, a home they love living in and a plan they felt calm about.

Is Consolidating Debt Into Your Home Loan a Good Idea?

It can lower your monthly repayments, but it can also cost more over time. Moving a short-term debt such as a car loan or credit card onto a 30-year home loan stretches the repayment period.

If you do it, extra repayments can help you clear that portion sooner. Where the debt is small, a personal loan may suit you better, because the term is shorter. We will talk through both options with you so you can see the real numbers side by side.

What Can You Use Released Equity For?

Most people use released equity for renovations, debt consolidation, investment or business needs. The purpose matters because it affects how the loan is set up and whether any interest may be tax deductible.

If you plan to buy an investment property, you can read more on our investment loans page. We suggest keeping money for investing in a separate loan split so the records stay clear. Tax outcomes depend on your own situation, so please speak with your accountant before you decide.

Who Can Help You Work Out the Right Amount?

A mortgage broker can compare lenders for you, run your numbers and explain the trade-offs in plain language. You can borrow less than your full usable equity, and often that is the kinder choice for your budget.

Try a refinance calculator first to get a feel for the figures. Then, when you are ready, we can look at your whole picture together, including your goals, your family and your comfort level with repayments. You can read about our team on the about us page.

If you are wondering whether equity could help your family, we would love to hear from you. Call one of our team or book an appointment at a time that works for you.

Frequently Asked Questions