Don’t be misled by home equity
“Money…enables us to get what we want instead of what other people think we want.” – George Bernard Shaw
One way to put the equity in your home to work without selling it is to talk to your lender about a “home equity loan”. This is a loan where you take out a mortgage against your existing property to buy investment assets such as property and shares. It’s a great strategy if you’ve got a secure income and can handle the extra repayments but remember that all the equity in the world is no good to you unless you’ve got the income to match it. An extreme case would be a pensioner couple living on the beach who have seen their home skyrocket in value. They may have millions of dollars of equity but would not have the income to make the repayments on a loan.