Page 17 - Smartline eBook - Upgrading your home
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 How to determine your equity
For example:
Value of your home = $750,000
Amount still owing on your mortgage = $200,000 Your equity is: $550,000
The amount you can borrow against your equity depends on the lender but may be approximately 80 per cent. Your Smartline Adviser will be able to calculate your borrowing power with different lenders.
 Meet with your Smartline Adviser
Once you have a good handle on your financial situation and your future plans, it’s time to speak with your Adviser. You can’t start looking at properties or designing and planning your renovation or build if you don’t know how much money you have access to.
Your Adviser will discuss your financial situation with you to determine your borrowing capacity and your ability to repay a loan. They will assess your current mortgage alongside any other debts, savings and assets to determine your usable equity, and analyse your income and expenses to calculate your borrowing capacity. They will also discuss the loan options available on the market, which loan features are most suited to your situation and which lenders might offer suitable loan solutions.
Your Adviser will be happy to help you with your market research by providing property reports and statistics for the area where you are living, as well as the area where you want to buy. Equally, they can discuss with you the current lending environment such as interest rates, serviceability calculations, documentation required and so on.
Loan options
There are a number of finance options you can use to fund your renovation,
rebuild or new purchase. Your Smartline Adviser will discuss with you which option is most suitable for your situation.
1. Loan top-up – renovations only
A loan top-up allows you to borrow more money from your current lender. You will only be eligible if you have built up enough equity in your current home. This is often the simplest and most cost-effective way of increasing your loan amount if you’re happy with your current loan and lender. You can typically increase your loan to borrow up to 80 per cent of your equity threshold, assuming you can service the increase in debt.
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