If you are a property owner and you have a sizeable amount of equity in your property, you may be able to go to your financier and apply for a “redraw” or commonly known as an “equity release”. Your lender may want to revalue the property to ensure that it hasn’t gone in value but generally speaking if you have more than 20% equity in the property then most lenders will consider an application. So lets look at some examples to see if your application may be successful.
|Scenario 1||Scenario 2|
|Value of property (subject to valuation)||$500,000||$550,000|
|Current amount owing on the loan||$450,000||$400,000|
|Available equity (subject to valuation) & proposed redraw||$50,000||$50,000|
|Loan Valuation Ratio (before redraw)||90%||73%|
|Loan Valuation Ratio (before redraw)||95%||77%|
In the first scenario, the loan valuation ratio prior to any “redraw” was 90% and after the proposed “redraw” the loan valuation ratio would be approximately 95%. In our experience this application would not be successful as the it exceeds the loan valuation ratio exceeds the industry standard of 80%
In the second scenario, the loan valuation ratio prior to any “redraw” was 73% and after the proposed “redraw” the loan valuation ratio would be approximately 77%. In our experience this application could be successful (subject to a current valuation and subject to verification of a sustainable income to service the loan).
At Get Debt Free we do not offer loans and we always recommend that you first make an application with your existing lender as they have your payment history and details. However, if your existing lender rejects the application we would then pass your information (subject to your approval) to a specialist company who helps people with impaired loans or bad credit loans.
For more information please call our toll free advice line on 1800 98 10 70.