Using your equity

What is equity?

Equity is the difference between the value of your property and the amount you have borrowed against it. You can calculate the amount of equity in your property by subtracting the balance owing on your loan from the current value of your property. The equity you have in your property can grow by paying your loan balance down (either through lump sums or regular extra repayments) or by the value of your property increasing over time.

How can you use your equity?

Using your equity means accessing more funds based on the amount of equity you’ve built up in your property. You can do this by either redrawing any extra repayments you’ve made, applying for a credit increase on your existing loan or by applying for an additional loan using your current property as security. This means you might be able to borrow funds for renovations, a new car or a family holiday. You’ll have the benefit of a lower interest rate from a loan secured by your property, compared with a personal loan or a credit card.

How do you access your equity?

You can access your equity via:

Redraw. This is the simplest method of accessing any equity you’ve built up in your property as you’re drawing back any additional repayments you’ve made on your loan.

Principal increase. A credit increase is when you apply to have the additional funds you’re borrowing added on to your current loan.

Additional loan. You can obtain extra funds by taking out an additional loan and retaining your existing loan. This can be of benefit if your existing loan is in a fixed rate period, or there’s a reason why you’re not eligible for a credit increase.