Home LoanHow to Use Home Equity for Refinancing in Sydney

April 1, 2024

What is Home Equity?

It is the difference between the total amount you owe on a mortgage and what the home’s value is. It’s actually what you can say you own in a home. The sum of equity in a house can increase as time goes by while you make payments and the property’s value rises. Basically, home equity is the property’s current market value less any liens, like mortgages which are bound to that property. It is an asset that you can take against to meet necessary financial needs like paying off highly-priced debt or paying school fees.

Why is it important to know Home Equity?

Home equity can be a continual strategy for building revenues. Mortgage payments lessen what you owe while your home acquires value, so paying on a house has been called “a forced savings account.” This is different from many other assets bought with a loan like vehicles, which normally lose value while you pay them off.

What is Refinancing?

It refers to the procedure of revising and changing the terms of an existing credit agreement for loans or mortgages. When a business or an individual makes up his mind to refinance a credit agreement, they effectively look at making pleasing changes to the rate of their interest, payment scheme or other terms mentioned in their contract. Once approved, the borrower receives a new contract that replaces the first agreement.

Can you use home equity for refinancing your home loan?

You may be able to grip the equity in your home to refinance to a better home loan. This is because numerous lenders value ‘safer’ clients with higher built-up equity as they show less of a financial risk than high LVR clients. The thing is, the more of your home you own, the more security you have accrued up for the loan. You’re less likely to get into financial issues like mortgage stress or mortgage imprisonment, because you’ve handled the mortgage well so far and owe your lender less. If you have managed to grow your home equity and lower your LVR, you might be able to change to a low interest rate home loan and take advantage of more affordable mortgage plans.

Factors that Affect the Approval of your Home Equity for Refinancing in Sydney

In view of the factors that affect the approval of a home equity loan and for any loan basically, the very first thing that your financial company will look into is your creditworthiness, if you can pay back the loan. Here are the basic factors they consider:

  1. Your income and employment are the number one factors that will greatly affect your chances to get home equity for refinancing approval. You will want to express how long you have been working and how much money you have for your household. This factor ultimately shows your lender if you can pay back your loan over time. Now, if you are self-employed, be ready to give out proof. Mostly, lenders need to see your personal and business tax returns usually within the last two years. They will also look for a profit and loss statement. Whether self-employed or not, you can also add child support income or livelihood payments as additional income if this applies to you.
  2. Your present mortgage will also supply important information – and again a crucial factor of your chances to get approved for refinancing in Sydney. Depending on where you have your first home loan and how long your mortgage is will actually depend on the information needed. You can apply for a home equity for refinancing at a different financial company from where you have your first mortgage because these are two separate mortgages.
  3. It’s the best time to look at all of what you have. Collecting your bank statements is your first task for accumulating asset information. Then, have records of all other assets like your retirement accounts, stocks and bonds and other real estate you might have. This really starts to show your capability to show your lender you can pay back your loan over time.
  4. Now that you have shown your lender what you have, you’ll also need to show your lender your liabilities. Mostly, your liabilities will include other loans you have like credit card debt and other payments you make monthly. If you pay child support or upkeep, you need to make sure to show these payments as a liability as well.
  5. Your credit standing will tell your lender the most about you, do you have a reputation for paying your bills? Based on your credit standing, will your lender see that you can pay back the loan? Most of the time, there can be cases on a credit report from college days or misunderstood bills. It’s always recommended to review your credit report so you can correct or work on any issue that is dragging your credit score down.

How can Australian Financial and Mortgage Solutions help you with home loan refinancing using home equity?

AFMS’s expert mortgage brokers will guide homeowners getting into the complicated world of refinancing. Their mastery covers comprehensive financial analysis, market insights and customised mortgage solutions. Australian Financial and Mortgage Solutions experts work closely with clients by understanding their special financial goals and come up with strategies to tackle home equity effectively. By offering a various range of mortgage products and personalised assistance, AFMS allows homeowners to make educated decisions aligned with their long-term goals.

In the constantly developing real estate market, Australian Financial and Mortgage Solutions provides critical guidance to homeowners looking to refinancing in Sydney. With great knowledge about local laws, lending operations and compliance requirements, AFMS makes sure that clients get into the refinancing process smoothly. By staying on a level of regulatory changes and industry growth, AFMS secures the interests of homeowners and gives transparent and compliant refinancing transactions.

Contact Australian Financial and Mortgage Solutions today to schedule an appointment. Let us personalise a refinancing technique that suits your special needs and objectives. Whether you’re looking to access home equity for refinancing, cash for renovations, lower your monthly payments or consolidate debt, Australian Financial and Mortgage Solutions is here to lend a hand.

Don’t wait any longer to advance your financial state. Trust Australian Financial and Mortgage Solutions for your home equity refinancing in Sydney, and drive on a path towards exceptional financial freedom. Reach out to us now and take control of your financial future.