Higher house prices mean increased equity, and it can be all too tempting to start thinking about how to spend it. Why not use that ‘extra’ value to buy that flash boat, or take that holiday you’ve always dreamed of?
Like anything to do with your biggest asset (your home) there are positives and negatives to consider when making any decision.
While it’s easier to borrow money for things that add value - like home improvements, kick-starting a business, or purchasing a rental property – it’s also easy to use the money for things that don’t, and can leave you paying in years to come.
Having equity in your house can help set your finances up for life, so while interest rates are low focus on how quickly you can get mortgage free instead.
It can be hard, but try and resist buying big ticket items on impulse, save for household items and holidays, if you want to use your mortgage to consolidate debt make sure it’s paid off as quickly as possible – and cut up the credit cards!
Also consider that while the market can rise, it can also fall – and it’s important to remember that using equity while times are good (and potentially over-committing), can become a major problem if the market falls and leaves you with negative equity.
If you want to know more about how to handle higher equity in your home, contact us now to help you set goals, put a plan in place to get mortgage-free faster, and make the most of the increased value of your home.