Releasing Equity in Your House: Is It Worth It?

In the realm of property investments and wealth creation, one of the most strategic moves a homeowner can make is releasing equity in their home. This decision, when executed wisely, can be a game-changer, particularly for investors focused on generating positive cash flow. This is our focus at GPFG. We have tailored our method to provide the best positive cash flow investment opportunities for our clients, so that they can release their locked up equity and make it work for them, earning passive income, adding cash flow and leverage to their portfolio.

Understanding Home Equity

Home equity is the portion of your property that you truly “own” — it’s the difference between your property’s current market value and the remaining mortgage balance. As your property appreciates in value, and as you pay down your mortgage, your equity increases. This untapped wealth can be a powerful tool in your investment arsenal.

Releasing Equity in your Home Australia Calculator

To determine the equity you have in your home, simply deduct the amount you still owe on your mortgage from the property’s current market valuation. For instance, if the market value of your home stands at $800,000 and your outstanding mortgage is $300,000, then you possess $500,000 in home equity. When releasing equity in Australia, most lenders will typically only let you release up to 80% of your equity.

It’s a good idea to always have an accurate assessment of your equity position, since home values and mortgage rates are always changing. Work with a professional mortgage broker, like our partners at Financebetter. They can assess your current equity situation and advise on the amount you can responsibly release.

Is it worth releasing equity from your house?

The primary reason to release equity is to reinvest and grow your wealth. With a strategic approach, homeowners can leverage this equity to expand their investment portfolios, particularly in properties with positive cash flow. This method aligns perfectly with GPFG’s focus on wealth creation through savvy property investments.

“As we tell clients here at GPFG, releasing equity from your home can be a pivotal step in your wealth creation journey,” says Mark Reed, International Sales Manager. “It’s not just about unlocking funds. It’s not just a lump sum of cash, though there are times when that is needed. We are here to show you how to use that cash, and make it work for you, with savvy investments.”

Benefits of Releasing Equity

1. Access to Capital: this is the greatest benefit we see at GPFG for our clients who want to invest in property, but don’t have enough liquidity. Releasing equity provides quick access to capital. Going through the home equity release process allows for the acquisition of additional properties, particularly those generating positive cash flow, thereby enhancing financial stability through a steady income.
Read more: Unlock Your Equity and Earn Cold Hard Cash

2. Leverage: Using home equity for further property investment amplifies financial returns. By borrowing against your home’s equity, you can control larger assets with less personal capital, potentially boosting investment returns. Caution is advised, as leveraging increases exposure to market risks.

3. Diversification: Equity release aids in diversifying your investment portfolio by allowing investments in varied property types and markets. This strategy spreads risk and can safeguard against volatility in any single investment, promoting a more stable and reliable financial growth over time.

Read more about the reasons why homeowners consider equity release as part of a wealth creation strategy: Equity Release Done Right.

Risks and Considerations for Releasing Equity

We are always sure to educate our clients on potential risks for investments, which is why we offer 1-on-1, tailored advice with experienced and qualified mortgage brokers. Releasing equity increases your mortgage debt, so it’s crucial to consider the additional financial commitments. The key is ensuring that your investments generate enough return to cover these costs while providing positive cash flow.

Our partners at Financebetter recently sat down in our GPFG podcast studio to discuss equity release in great detail: “If you’ve got equity, utilise it.” | An Interview with Financebetter.

Equity Release and Fractional Property Investment

There are so many reasons why fractional property investment and equity go hand-in-hand. “When you release equity, you are using your home as leverage, and that carries risk,” says Mark. “But with fractional investment, you don’t have to release a lot of equity, you can choose as little as you want, and still reap the benefits of cash flow and property investment.”

What is Fractional Property Investment?

Fractional property investment represents a revolutionary approach to real estate, making property ownership accessible to a broader audience. This investment model allows individuals to buy shares or fractions in a property, enabling them to invest in real estate with lower capital outlay compared to traditional property investments. Our clients love the lower price points, because small-scale investors can partake in the property market, enjoy rental yields, and benefit from capital appreciation, all while mitigating the financial burden of sole ownership.

Leveraging Equity Release with Fractional Real Estate Investment

For homeowners looking to diversify their investment portfolios without significantly impacting their liquidity, combining equity release with fractional property investment is truly a win-win solution. Equity release allows homeowners to unlock the value tied up in their property, providing them with capital that can be reinvested. When directed towards fractional property investments, this capital can work to generate additional income and growth potential, effectively using one property to help fund investments in others.

Benefits of Combining Equity Release with Fractional Investments

Every day at GPFG, we work with clients on how they can leverage their equity, at a level that they are comfortable with the amount invested and risk tolerance, which is why fractional investment is the perfect strategy.

– Increased Accessibility: Equity release can lower the barriers to entry for fractional property investments, making it easier for homeowners to leverage their existing assets to grow their investment portfolio.

– Risk Diversification: Investing in multiple fractional properties can spread risk across different markets and property types, reducing the impact of any single investment’s performance on the overall portfolio.

– Flexible Investment Scale: Fractional investment allows for scaling the investment size to match the available equity release funds, offering a tailored investment approach that can adjust to individual financial capabilities and goals. At GPFG, we offer a sliding scale of 25%, 50%, or 75% investment, but for ultra-luxury properties, the fractions can start as low as 10%.

– Cash Flow Management: By investing equity release funds in income-generating properties, homeowners can create additional cash flow streams, which can be particularly advantageous for retirement planning, supplementing retirement income, or achieving financial goals.

“The synergy between equity release and fractional property investment works really well, particularly when investors are considering their long-term financial goals, risk tolerance, and how much they want to invest in a property or multiple properties,” says Mark.
“Consulting with financial advisors and property investment specialists on our team can provide valuable insights and guidance, ensuring that this strategy aligns with one’s overall financial plan.”

Equity release and fractional property investment give homeowners a new way to get into the property investment market. By using the equity from their homes, they can spread out their investments and make their portfolios stronger. This method opens up chances to build wealth, helping investors manage risk, make investing easier, and grow their property investments.

Equity Release with GPFG

Releasing equity in your home can be a powerful strategy for wealth creation, especially when aligned with investments in properties that offer positive cash flow. It’s a pathway to expanding your portfolio, increasing your assets, and building a more secure financial future. At GPFG, we are committed to guiding our clients through this journey, ensuring that every step taken is a step toward greater financial prosperity.

Ready to explore how you can release equity in your home for wealth creation? Contact GPFG today, and let’s unlock the potential of your property investments together.


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