If you’re looking to leverage the equity in your home to gain access to additional funds then the My Equity Loan may be worth considering.
Generally speaking, equity loans don’t have as many features as a full home loan package however they do give you access to a line of credit facility which is a type of mortgage gives you the flexibility to draw on funds if and when you need to, similar to a credit card.
The funds can be used for other purposes like renovating, debt consolidation, as a deposit for an investment property or to buy a new car, for instance.
When it comes to repaying your equity loan, you will need to pay a minimum of five percent of the balance monthly. You can make additional lump sum repayments at any time and there is no penalty for paying off the loan balance early.
This overdraft loan works a little like a credit card where My Credit Union will set a loan limit and give you access to those funds through a Visa Debit card. Interest is only paid on the funds you use and not the whole balance.
You can borrow up to 80 percent of the property value through the My Credit Union My Equity Home Loan, however you must meet the minimum loan amount of $25,000.
If you’ve made a substantial dent in your loan repayments and you’re looking for extra funds to either renovate or invest elsewhere, then an equity loan might work for you. This type of loan can be useful if you receive lump sums of income, for example investment returns once a month which can help you pay off the balance of the overdraft.
Equity loans generally aren’t the most competitive when it comes to interest rates, but they may be valuable if you’re using them correctly.
The key to managing an overdraft is discipline, as you will essentially have access to a large sum of readily available cash, which you only need to pay in monthly installments, much like a credit card.
Depending on the nature of the investment and your personal cash flow, it’s worth weighing up whether the high interest rate is worth the convenience of a revolving line of credit. It’s worth noting that My Credit Union has a limited branch network and the phone support is not as convenient as some other lenders which can be a consideration for borrowers who prefer face-to-face banking.
The My Equity Home Loan from My Credit Union allows you to tap into the equity in your property.