Buying an investment property is a great step toward creating a financial situation that will benefit you in the long run. You will often experience higher returns than investments in other assets, with the rental income supplying you with your own passive source of wealth.
If you own your house outright and want to buy another, you can use your gathered equity to buy the new property. This means that there is no need to dip into your life savings. Instead, your usable equity can cover what you need to secure a substantial deposit and avoid paying for a home loan that does not suit you.
What is home equity?
Home equity refers to the difference between the current value of your property and the remaining balance you owe for it.
With the monthly home loan repayments you make in the form of principal and interest repayments, your total home loan amount owed has been reduced, allowing your total equity to steadily increase. Additionally, if the market value of your property has increased, your equity will also see significant growth.
Disclaimer: This article is not intended as legal, financial or investment advice and should not be construed or relied on as such. Before making any commitment of a legal or financial nature you should seek advice from a qualified and registered Australian legal practitioner or financial or investment advisor.
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