This article touches on three ways to build equity in your home or investment properties. If you want to build equity within your housing portfolio, you should focus on adding on extra’s to your home which add to the homes equity, get regular valuations and refinance where possible and by making use of mortgage offset accounts to maximize your offset balance.
Adding on extra’s
You can add immediate equity to your home by:
- Building a pergola outside your backyard;
- Adding roller shutters on your windows;
- Getting the roof tiles recolored;
- Getting your front lawn landscaped;
- Getting the outside of your house repainted or if it’s a brick home getting the brick rendered; and
- Get ducted air conditioning installed.
Get a valuation and look to refinance
You should aim to get a valuation on your property every 18 months. You can score better finance rates by paying off as much of the outstanding loans as possible whilst you get the valuation finalized. Refinancing will give you a lower interest rate, together with the additional repayments and the recent valuation, you will achieve an instant equity.
Make use of mortgage offset accounts
If you have multiple rental properties that are generating income for your and are still working full time – you may benefit from having all of your income being paid into the mortgage offset account.
The balance of the account is considered equity within the properties despite not being paid into the loans. For example, if you have a balance of $300,000 in a mortgage offset and outstanding investment loans of $900,000 you will have an outstanding loan balance of $600,000.
Deduct the loan balance of the current property valuations say, $1,500,00 would give you $900,000 in equity.