Access The Equity in Your Home

What Is Home Equity?

Equity is the difference between your home’s market value and the amount you still owe on your mortgage.
For example, If your home is valued at $700,000 and your mortgage is $400,000, your equity is $300,000.
Banks don’t usually let you borrow the full amount. In most cases, you can borrow up to 80% of your home’s value, less what you already owe.
Why it matters? Equity is an asset that can be used to fund renovations, investment properties, or other financial goals. Knowing your equity is the first step to deciding whether refinancing to use the equity in your home is the right option for you.

How to Access Home Equity

There are different ways to release equity, depending on your goals.
• Top-up loan
Adding to your current mortgage with the same bank.
• Refinancing
Moving your mortgage to a new bank offering better rates or terms. This may also allow you to borrow more.
• Revolving credit or offset loans
Flexible facilities linked to your mortgage that let you draw down funds as needed.

Each option has pros and cons, and it’s important to weigh the costs against the benefits.

When to Consider Accessing Equity

Releasing equity can be useful in many situations.
• Renovations or extensions
Using equity to upgrade your home can add value and improve lifestyle.
• Buying an investment property
Many New Zealand investors use home equity as a deposit on another property.
• Debt consolidation
Equity can help repay higher-interest debt like credit cards or personal loans at a lower mortgage interest rate.

The key is making sure the loan remains affordable long term.

The Application Process

Accessing equity follows a similar process to applying for a mortgage.
1. Property valuation
The bank may require a registered valuation to confirm current market value.
2. Loan-to-value ratio (LVR)
Most banks allow borrowing up to 80% of the home’s value, or 70% for investment properties.
3. Affordability check
Lenders assess income, expenses, and debt levels to confirm you can manage repayments.
4. Approval
Once approved, equity funds are made available through a top-up or refinance.

This process usually takes 1-2 weeks, depending on valuation and document turnaround.

Risks and Considerations

While equity can provide flexibility, it’s important to consider the risks.
• Higher repayments
Increasing your loan means your repayments will rise.
• More interest over time
Extending your mortgage or borrowing more can increase total interest paid.
• Market changes
Property values can go down as well as up, which may reduce available equity.
• Responsible borrowing
Use equity for long-term benefits, not short-term spending.

A mortgage review before applying ensures the loan structure supports your goals.

Conclusion & Next Steps

Accessing equity from your home can provide opportunities to renovate, invest, or reduce expensive debt. The key is understanding how much equity is available and choosing the right structure to support your goals.

If you’d like to explore refinancing options for your current home loan, contact us today. We’ll review your options, check affordability, and guide you through the process.