Barry Plant Manningham Knows What To Do with Lazy Equity
So you bought your home several years ago. Prices have gone up but you still owe the bank a fair chunk. But what you do have is EQUITY! Equity is the difference between what the property is worth and what you owe.
So, what do you do with equity?
Well, if the bank agrees to allow you to access your equity, you can use it for anything….Go on that overdue holiday or buy your dream set of wheels. If you are smart though, you might consider using your equity to invest.
Let’s look at an example. You bought your home 9 years ago for $1,200,000. You took out a mortgage at the time for $600,000 but have now paid that down and now owe $450,000. With the rise in the market though, your home is now worth $2,000,000. You now have $1,550,000 of equity…. doing nothing.
Now as agents, we don’t give financial advice but we can help you work out your equity position. You can then take this to your accountant or advisor. They may suggest that you look at buying 2 or even 3 investment properties. Perhaps around $600k each. They may get you to take out interest-only loans against those homes so that it has little or no effect on your lifestyle as the rent may cover or nearly cover your payments.
You won’t get rich on rent but with Melbourne property historically doubling every 10 years or so, in a decade the $1,800,000 properties you bought might be worth closer to $3,600,000. Now you’ll have costs and taxes to come out of that but you probably don’t mind if you’ve potentially set up you and/or your kids for life.
Please get your investment advice but if you need to know the likely value of your home to start that discussion, please get in touch with the Barry Plant team. We’d love to help you get your investment journey underway.
Please see below our impressive sales for the week!
- 1 Falcon Court, Doncaster East sold for $1,625,000
- 8 Gaudion Road, Doncaster East sold for $1,651,000
- 23 Victoria Avenue, Rosanna sold for $1,564,000
- 10 Watling Terrace, Doncaster East sold for $1,460,000
- 4 Kurrajong Close, Viewbank sold for $1,225,000
- 25 Helene Street, Bulleen sold for $1,237,000
- 2/56 Devon Drive, Doncaster East sold for $1,185,000
- 75 Vanbrook Street, Forest Hill sold for $1,070,000
- 1/1 Derreck Avenue, Bulleen sold for $970,000
- 2/15 Stanley Street, Box Hill South sold for $965,000
- 127 Glendale Road, Donvale sold for $940,000
- 140 Manningham Road, Bulleen sold for $885,000
- 12/21 Doncaster East Road, Mitcham sold for $820,000
- 1/11 Rose Street, Ivanhoe sold for $675,000
- 3/28 Simpsons Road, Box Hill sold for $662,500
- 104/1 Red Hill Terrace, Doncaster East sold for $500,000
- 6/1146 Whitehorse Road, Box Hill sold for $450,000
- 38 Deakin Street, Mitcham sold!
- 3/45 Talford Street, Doncaster East sold!
- 3/10 Poplar Crescent, Bellfield sold!
Currently under offer and will be sold soon:
- 9 St Andrews Court, Eltham North
- 18 Cheverton Road, Lower Plenty
- 5/19 Bamfield Road, Heidelberg Heights
- 31 Fitzjohns Drive, Bundoora
- 1/136 Parker Street, Templestowe
- 201/1 Mitcham Road, Donvale
- 204/13-15 Goodson Street, Doncaster
- 802/20 Hepburn Road, Doncaster
- 7/1137 Doncaster Road, Donvale
- 10 Morang Avenue, Templestowe Lower
Spiro Drossos
Managing Director
Barry Plant Eastern Group