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13 Wealth Building Exercises


10. Usable Equity

Investment Property Australia – 11. Your usable equity - Australian Property Club

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Accessing equity and the theory behind useable equity can be applied to all properties, whether it’s your home or an investment property. In the case of properties you have only recently bought, there might not be much there, but over time you will gain more and more equity. If you have an existing property it is important to have your mortgage broker analyse whether your current loan is competitive and structured correctly to enable the next purchase. Working out your useable equity is critical in building wealth. You can use any  property(s) to draw equity from, so you can set up and secure a leverage loan to start your investment strategy. This will allow you to have your deposit ready for your next purchase, along with a buffer that will sit within the leverage loan for the repayment shortfall.

The formula to work out your useable equity is: (90% x your property value from a bank valuation) less your outstanding loan balance. Knowing this will help you determine how we go about building your wealth.

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