27 March 2018 Top 3 ways to increase the equity in your property Equity is the difference between the current market value of the property and any amount still owed. The great thing is, you may be able to borrow a portion of your equity to fund your renovations, buy another property, consolidate debt,^ or fund something like a car. Keep in mind you still need to pay interest on any equity that you borrow. Read on for some smart ways to help increase the equity in your property: 1. Renovate: You could top up your loan to renovate, which may help increase your property's market value and in turn, its equity. Be cautious not to overcapitalise by spending too much on your renovations. As a general rule, experts suggest that you do not spend above 10% of the property value on a cosmetic renovation. 2. Get a principal and interest loan: The more you’ve paid off on your loan, the more equity you will have in your property. If your loan is set up as principal and interest, rather than interest only, you'll be able to pay off your home loan faster and reduce the overall amount of interest paid over the life of the loan. Principal and interest rates are also currently lower than interest only rates at the majority of lenders including RAMS. 3. Make additional repayments: If you happen to have extra funds, or money sitting in other transaction accounts, why not pop it into your home loan?* This will help to increase your equity and remember, you can redraw# these funds later if you need to. Things you should know: Credit criteria fees and charges apply. ^Consolidating your short term debt into your home loan may extend the loan term of the short term debt and could result in more interest payments over the loan term. You should obtain independent professional advice relevant to your financial circumstances. *Whilst variable loans do not have a limit of how much you can over pay, there is a prepayment threshold (usually $30,000) for fixed rate loans that you cannot exceed without paying break costs, which can be significant. Subject to RAMS’ approval. #Minimum redraw amounts and fees may apply.