Using equity to buy an investment property in South Australia can be a smart financial move, but it’s important to carefully consider your options and understand the potential risks and benefits.

Equity is the difference between the value of your property and the amount you owe on your mortgage.

For example – if you’re home is worth $700,000 and you owe $300,000 on your mortgage, your home equity equals $400,000.

If you’ve built up a significant amount of equity in your property, you may be able to use it as collateral to secure financing for a new investment property.

One option is to refinance your existing home loan and take out a larger mortgage, using the additional funds to purchase your investment property. Another option is to take out a separate loan secured against your equity.

Before you decide to use your equity to invest in property, it’s important to consider the potential risks. Property prices can fluctuate, and if the market value of your investment property falls, you may be at risk of owing more on your mortgage than the property is worth. Additionally, taking on more debt can increase your financial obligations and put you at greater risk of financial stress if you experience unexpected changes in your income or expenses.

However, if you carefully assess the risks and choose a property with strong rental potential, using your equity to invest in property can be a smart financial move. Rental income can help you pay down your mortgage and build wealth over time.

If you’re considering using your equity to invest in property, it’s important to seek advice from a financial professional, such as a mortgage broker or financial planner, who can help you assess your options and develop a strategy that aligns with your financial goals and risk tolerance.

Our property management team would love to hear from you if you are interested in having your investment property professionally managed.

Please click HERE to view the Form R7.

Disclaimer: All information provided has been obtained from sources deemed reliable, however, we cannot guarantee the information is accurate and we accept no liability for any errors or oversights. Interested parties should make their own enquiries and obtain their own legal advice.