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6 Debt Management and Leverage

Using home equity to build investments

Some people use the equity they have in their personal residence to borrow to purchase investments, like property, shares or managed funds.

Here is an example where you use your equity in your home to purchase an investment asset (either an investment property or a portfolio of shares).

Let’s say, you have a house worth $500,000 and a current mortgage of $100,000. The bank agrees to lend up to 80% of your property value. This is a total of $400,000.

Therefore you may apply to borrow a further $300,000 if you choose ($400,000 less $100,000).

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