You’re within a whisker of paying off your home loan. It’s understandable that you’re dreaming of all the things you can do once you’re no longer saddled with those regular mortgage repayments.

There is an entirely different way of looking at it though. If you’ve paid off a good part of your home loan, you’ll have a whole lot of equity you can access. The question is: would it be worth tapping into this equity to build even bigger dreams?


Equity is the difference between the market value of your property and the amount you still owe on your home loan. But it’s important to understand the difference between equity and what’s known as ‘useable equity’. The fact is, you can’t actually use all of your available equity.

Useable equity

Since the bank is lending you money against the value of your home, they won’t lend you the full amount. It makes sense: if house prices drop, they don’t want an outstanding loan that’s worth more than your property. So typically they'll lend you 80 percent of the value of your home, minus the debt you still owe.

When working out the percentage they’ll lend you, the bank will take into account your income, age, how many kids you have, your additional debts and a host of other factors.

Want to know what your property is worth? Request a free NAB property report today.


If you only have a few years left to pay your mortgage, you may have built considerable equity already.

This includes upgrading your home by renovating or extending it. This would have the added benefit of improving the place you live in while making it more attractive if you sell it one day.

Making upgrades to your home by renovating or extending it may be a great way to increase the market value of your home. Before you invest a lot of money into upgrading your property however, do your due diligence to avoid any pitfalls.

Get a feel for what prices renovated properties are selling for in your suburb. By doing this you’ll also uncover the style and quality level that your renovation needs to be for the area.


Invest the money

The equity you have in your home can be a powerful tool for wealth creation.

For instance, rather than saving for years to fund a deposit for another property, you can use the equity you already have to take another step on the property ladder. Assuming your property has increased in value, the equity can be the collateral to secure further lending. The general rule of thumb is that you can afford an investment property that’s four times the value of your useable equity.

In addition to investing in property, home equity can be used to start a business or invest in the share market as a way to meet your financial goals.

But above all, remember to play it safe.

If you don’t have any funds outside your home equity, then it would be risky to use every last cent of your usable equity to invest in property. You always need a buffer, some funds in reserve in case things don’t go to plan. Even if it means you can’t invest for a while, it’s important to keep yourself protected.

Speak to a financial adviser to find out more. They’ll understand your unique situation and help you plan the most profitable way forward.

Pay for your child’s education, take a holiday or buy a new car

The equity you’ve built in your home can also be used to pay for the other expenses. If it’s a new car or private school fees, accessing your home equity can be a good option.

An equity facility can turn the equity in your home into a ready source of funds to use as a line of credit. You can borrow up to your agreed credit limit without having to make further lending applications and you have easy access to your money whenever you need it.

Or, if you prefer, you can access your equity through a set term loan so that the funds are provided to you in one parcel with an agreed repayment structure.

One more thing

Even though home equity release has its advantages, it’s a big commitment and needs to be carefully considered.

By accessing the equity in your home, it means that the total amount you owe the bank will increase, therefore delaying owning your own property with all the peace of mind and freedom that entails. Withdraw enough and it could mean higher monthly repayments, stretching your budget beyond where you may be comfortable.

You want to be sure you’ve weighed up all the pros and cons before you make your decision. Again, it might be worth speaking to a financial adviser or your mortgage specialist first.

Ready to dream bigger?

Request a complimentary financial planning consultation

Or talk to your mortage specialist.

The information in this article should not be relied upon as financial advice as none of the information provided takes into account your personal objectives, financial situation or needs. NAB recommends you seek the counsel of an independent financial or legal adviser before making any investment or estate planning decisions.

(c) National Australia Bank Limited ABN 12 004 044 937, AFSL and Australian Credit Licence 230686.

We're ready to help you

Call 13 78 79

Mon-Fri 8am - 7pm (AEST/ADST)
Sat-Sun 9am - 6pm (AEST/ADST)

Talk to an expert
Enquire online