Equity is a powerful wealth creation tool.

Equity is the proportion of your home that you own, less the mortgage.

Generally banks will lend up to 80% of the value of a property and the rule of thumb is that you can afford an investment property that is four times the value of your useable equity.

Lenders will also take into account your income, your age, your dependants and how many additional debts you may have.

If you don’t have any funds outside your home equity, it may be risky to use every last cent of your usable equity to invest in a property. You will always need funds in reserve just in case, so it may mean that you may have to wait a while before investing, in order to keep yourself protected.

By unlocking the equity in your home, you can use it for the following:

• As a deposit
• To take out a line of credit
• Use it as a deposit bond or guarantee. Speak with a professional advisor to help you understand how much equity you can access and if this strategy will be a viable option for you. 

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