One of the most popular reasons borrowers look to refinance an existing loan is because they’re looking to use the equity they have in their existing property to borrow money for a number of purposes.
The main purposes are:
Equity is the difference between the money you owe on your property and the value a lender thinks your property could sell for. As an example, if you had a loan balance of $500,000 and you had your property valued at $800,000 then you would have $300,000 of equity and a loan-to-¬value ratio (LVR) of 62.5%.
If you are looking to refinance in order to access any existing equity in your property, the most important first step you must take is getting a valuation done on your property. Finance Prospects can organise a free valuation for you.
The reason a valuation is so important is because lenders will use the current value of your property to determine your LVR which will impact how much equity you have and how much additional money you will be able to borrow.
Getting a up-to-date valuation is critical because the valuation you had when you first purchased your property could have significantly changed.
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