Refinancing to access equity in your home: Why investing in a home office could increase the value of your home!
Should You Choose Refinancing to Access Equity in Your Home?
If there is one thing to come from the COVID-19 pandemic it’s the increase in workers being able to work remotely. In many cases, this is from the comfort of your own home. According to the Australian Bureau of Statistics almost 3.5 million of us regularly work from home in our main job or own business. With this in mind, buyers are now seeking homes with spaces for a home office whether it’s a dedicated room or simply a study nook.
Creating a space that is comfortable and is a dedicated workspace can be vital for productivity. It all helps shield onlookers into getting a sneak peek at your home via the background of a zoom call.
So, if you’re thinking about investing in a home office, you may be able to refinance your home loan to access equity. If done right the money you spend may just increase the value of your home in the long run.
What is Equity?
Equity is the difference between the money you owe on your property and the value a lender thinks your property is worth. For example, if you had a loan balance of $500,000 and you had your property valued at $800,000 then you would have $300,000 of equity to play with.
Where Do I Start?
The first thing you’ll want to do is get your current property valued. This will allow you to figure out just how much equity you may have to draw back on. But be warned, valuations can differ between lenders so it pays to work with your mortgage broker to seek the best value for your property.
Don’t forget about Lenders Mortgage Insurance
One thing to remember is that when refinancing you may still come across Lenders Mortgage Insurance. This means that if the bank allows you to borrow more than 80% of your property value you may need to pay LMI, even if you paid it for your first loan.
Other Reasons to Access Your Equity
If renovating your home isn’t on the cards you may still be able to access your equity for other reasons such as:
- Buying a car
- Buying an investment property
- To consolidate debt