Been in your home a while? If so, there’s a good chance you’ve built up some tasty equity! But let’s break it down—what even is equity, and why should you care? Simply put, it’s the difference between what your home is worth today and what’s owing on your mortgage.
An equity release lets’ you tap into that value, turning it into cash while still keeping your home. Sounds good, right? But, like with any big money move, it’s worth weighing up the pros and cons before jumping in.
Pros of Equity Release
- Cash Without Selling Up
An equity release lets you tap into the value of your property without having to sell your home. Use it for renos, paying off debts, a dream holiday, or even helping out the family. It’s your money, your call. - Total Money Freedom
Once that equity’s released, it’s all yours to spend as you like. Upgrade the kitchen, explore the world, use it to purchase an investment property or shares, or just enjoy the retirement you’ve earned. Whether it’s fun or functional, the choice is 100% yours. - Stay Put, Stay Happy
No need to say goodbye to the home you adore. With an equity release, you can keep living in your place while enjoying the extra cash flow. Perfect if you love where you live and want to stay put.
Cons of Equity Release
Here’s the ‘De-afied’ version:
Things to Think About Before Releasing Equity
- Reduces Your Inheritance
Getting cash now sounds great, but it means less for your loved ones later. When the property’s sold after you’re gone, the equity release loan will be paid out first, so your heirs might get a smaller slice of the pie. - Additional repayments
An equity release is a loan of money from the bank. Usually you would “top up” your existing home loan. This means that if you release $100k of equity, your repayments will increase by approx. $600 per month (at a rate of 6%). Here’s a calculator you can use to work that out yourself. - Could Impact Pensions or Benefits
Tapping into your equity might shake up your eligibility for government benefits or pensions. It’s a good idea to seek independent and financial advice to see if it could affect you. - Upfront Fees and Costs
Equity release comes with some price tags—think possible valuation fees, loan application fees, and the lenders legal costs. Be sure to factor these into your decision so there are no surprises down the track.
Is An Equity Release Your Best Move?
An equity release can be a game-changer, but it’s not a one-size-fits-all solution. Like anything, it comes with its pros and cons, and whether it’s the right fit depends on your unique situation. If you’re on the fence, chat with us. We can help you figure out the best option, because at More Than Mortgages, we offer personalised, free consultations to run you through your options. Contact us today on 02 6188 4555 or make an appointment for a chat.
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