Equity release, also known as cash out, is a strategy homeowners use to leverage the equity they’ve built in their property. Equity refers to the difference between your property’s value and your outstanding loan balance. For example, if your home is worth $1 million and you owe $500,000, you have $500,000 in equity.
However, lenders typically allow you to borrow up to 80% of this equity without incurring additional fees. Fees such as Lenders Mortgage Insurance (LMI). In the example above, 80% of $500,000 would mean you could access $400,000 in equity.
What Can You Do with Released Equity?
Many homeowners use released equity to invest in new assets. One of the most common strategies is purchasing an investment property. Allowing you to expand your property portfolio, generate rental income, or enhance your retirement plan. Real estate offers a stable and long-term investment option for many, making it an attractive choice for equity release.
But property investment isn’t your only option. Some people choose to diversify their portfolios further by investing in stocks, shares, or other asset classes. These could include dividend-yielding stocks. By tapping into your property’s equity, you can invest in opportunities that grow your wealth. This allows you the potential to earn money while you sleep.
How to Know How Much Equity You Can Access
At Roar Capital, we specialise in helping clients understand and maximise their equity. We have access to a range of proprietary tools to assist us. In addition, there are some useful calculators on our website that can help you determine things like borrowing capacity and much more.
Whether you’re looking to purchase an investment property or diversify into other assets, releasing equity from your home can be a powerful tool for building wealth. Before making any decisions, it’s essential to consult a financial expert to ensure you’re taking the right steps for your financial goals.
If you want to learn more about how equity release works or explore your options, reach out to us at Roar Capital. We’re here to guide you through the process and help you make informed financial decisions.
