Newspaper article The Chronicle (Toowoomba, Australia)

Building Equity in Property

Newspaper article The Chronicle (Toowoomba, Australia)

Building Equity in Property

Article excerpt

HAVING equity in your home means the difference between the value of your property and how much you owe on it.

Not only is it a great feeling to see the amount owed on your property decrease, but it also means you might be able to use that equity to increase your loan for things such as renovations, upgrade to a more valuable property or to purchase an investment property.

How to build equity in your property

There are a number of ways to actively build equity in your property -- other than making your necessary regular mortgage repayments.

1. Increase the value of your property

By adding value to your property you are increasing the equity you have in that property.

This can be done by making improvements to the property.

The kind of improvements you do and how much you spend will depend on your particular situation.

If you are looking to build equity in your property and make money out of it, it's important you don't spend more than you could potentially recoup should you decide to sell, this is known as overcapitalising on your property.

It's important you consider the possibility of overcapitalisation and what that means.

There are many ways to add value to a property.

Here's a list of simple improvements many people consider when looking to renovate:

Internal and/or external painting


Roof replacement or repairs

Floor replacement or repairs

Bathroom renovation

Addition of a new bathroom

Kitchen renovation

Addition of storage such as built in wardrobes

2. Linking an interest offset account

An offset account operates like a savings account but is linked to your loan account.

Instead of being paid interest on your offset account, the amount of interest you pay on your loan is reduced.

This can help you pay your home off sooner, and build equity while you're at it. …

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