Easy Home Equity Loans: Quick Approval Guide

By: Aaron Robbins0 comments

Home equity loans are a flexible and hassle free finance solution that allows home and business owners to access the funds they need to get ahead. If you’ve been looking into the benefits of taking out a home equity loan, but want to know how to get approved quickly, then keep reading, as we deliver our quick approval guide to easy home equity loans.

What is a home equity loan?

A home equity loan is one of the easiest and most efficient ways to unlock the equity that’s tied up in your property’s value to use elsewhere. If you’ve got an existing mortgage against your property, you can still apply for a home equity loan (provided you have sufficient equity in your property value, of course) and the home equity loan will be considered a form of second mortgage.

What are the benefits of using a home equity loan?

Business owners know that cash flow and capital are what keeps their business afloat. However, often, in order to build more capital, or generate more cash flow, they first need the finance to help boost their position. This is one of the main benefits of using a home equity loan — if the business owner owns a residential property or commercial property (including their family home), they can unlock the equity in their home and use those funds within their business.

The most common uses for home equity loans are:

  • Consolidating debt (including personal loans, credit loans, credit cards and other small business loans).
  • Fund home renovations or home improvement projects. This includes business renovations, expansions or updating your workshop or storefront fit out.
  • Covering lifestyle expenses. With the cost of living crisis well and truly upon us, many people are utilising the equity in their home to be able to stay afloat until things pick up again.
  • Repaying ATO debt. Many Aussie businesses have unpaid tax debt, which a home equity loan can easily sort out.
  • Medical expenses.
  • Providing a one-off boost to their business’s working capital. Whether it’s to hire staff, purchase more inventory, or simply have funds at the ready to take advantage of opportunities, working capital is vitally important in every business of every size.

How to get quickly approved for a home equity loan

At Diverse Funding Solutions, we access over 200 of Australia’s top private lenders to offer home equity loans to business owners of all industries. Here are some of our top tips to give you the best chance of a quick approval when applying for a home equity loan:

1) Know how much usable equity you have in your property value

Understandably, how much equity you have determines how much you can borrow under a home equity loan, so the first step to getting approved is to know how much usable equity is sitting in your property value. At DFS, we offer home equity loans for up to 80% of the available equity in your home.

To calculate home equity, find the fair current market value of your home (real estate websites are a great point of reference as they will show recent sales in your area, and you can compare homes to your own). Otherwise, having a paid property valuer appraise your property will give you a reliable indication of how much your property is worth (though, these services do come at a cost). Once you know the value of your home, deduct any existing liabilities against it. For example, the balance of your outstanding home loan. The resultant figure is your equity value; of which, 80% can be used to support a home equity loan.

Perhaps obviously, the more equity in your home, the larger the potential loan amount you can borrow! If you own your home outright, then you can potentially borrow up to 80% of your total home’s value!

2) Understand how you’re going to repay the loan

Home equity loans are usually offered over loan terms that range between 12 months and 36 months, depending on your needs. As they’re only a short term loan, it’s important to put consideration into how you plan to repay the loan, before you apply.

Private lenders assess their loans by working out an exit strategy for the loan, and then devising a repayment schedule to fit the exit strategy. Common exit strategies may include expected monies (such as a lump sum from the sale of an investment property, a sizeable invoice being paid, refinance, inheritance, or sale of an investment portfolio).

3) Have all of your details ready

At DFS, we offer out loans with minimal documentation. However, if you’re using your home’s equity to borrow money, it does pay to have some information ready to support a speedy application process. The better you can depict your financial situation, the easier it is for most lenders to assess whether they’re in a position to lend you further funds.

For example, if you’re looking to use a home equity loan to pay out an existing loan, or consolidate debts, then having the most recent statement available from your existing loan provider is helpful. So too are the trading details of your business, your identity, a recent mortgage loan statement and council rates’ notice of your property. The more information you’ve got at hand, the lower the chances are that we’ll need to request further documentation, which, in some cases can lead to same-day funding!

Why approach Diverse Funding Solutions for a home equity loan?

Instead of only accessing your bank or mortgage lender, why not access over 200 of Australia’s top private lenders through Diverse Funding Solutions? Not only are we one of Australia’s fastest finance mortgage brokers, but our private lending solutions suit busy business professionals with fast and efficient loan processing, flexible loan terms, minimal documentation and no need to rely on credit checks to support lending.

With house prices having risen drastically over the past few years, now may be the time to access equity in your property to improve your financial circumstances.

Frequently asked questions about home equity loans

Are personal loans better than home equity loans?

Personal loans and home equity loans are two very different loan products. Firstly, the loan term on a personal loan typically ranges between 3 – 7 years, whereas loan terms on home equity loans are under 3 years. Secondly, the interest rates that are charged on personal loans are usually charged per annum, and calculated monthly, whereas the interest rate on a home equity loan (when accessed through a private lender) is generally calculated monthly, and charged monthly.

Usually, the loan is an interest only loan until the loan is repaid at the end, where the total outstanding balance is paid. Also, personal loans are generally unsecured, whereas a home equity loan effectively uses your home as a form of security. The maximum loan amount on a personal type is typically $50,000, whereas a home equity loan could go right up to $10,000,000 if you have the exit strategy to support it.

Are home equity loans the same as reverse mortgages?

Performing an equity release through a home equity loan is similar to a reverse mortgage, however, reverse mortgages are usually loan types designed for elderly Australians.

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