Markets rise and fall over time, which can affect the value of your property. However, ensuring that you continue to improve your equity position will have a positive impact on your wealth. Here are some tips on how you can do to grow the equity in your property.
What Is Equity
In the realm of property ownership, equity is the value of the property, less any debts that are owed in respect of it. So as you pay your mortgage, you increase the equity in your property. Similarly, if the value of the property increases, so does your equity.
Option 1 – Debt-less
Obviously, if you have no loan over the property then the entire value of it is your equity. That is not achievable for many of us, but don’t forget the value of time. Speak to your mortgage provider about:
- using an offset account;
- making small regular additional payments;
- making a lump sum additional repayment; and
- fixing interest, or getting a better rate
and watch your equity grow over the coming years.
Also, if you’re a property investor that is negatively geared, speak to your tax advisor before you take aim at reducing the mortgage.
Option 2 – Sweat Equity
Sweat equity is as obvious as it sounds, it’s the equity you can create by putting your own effort into the property. Depending on your skill level, there are many property improvement projects that you can do yourself, that will save you paying tradespeople and give you the best chance of maximising the value of your property.
Highlight great features – this could be lighting around the pool, window coverings or an entrance pathway.
Upgrade the garden – a well kept garden with mature plants is a deciding factor for a lot of home buyers. If you need some tips, check out our post on garden makeovers.
Modernise kitchens and bathrooms – the kitchen is very often the tipping point for buyers and adding appliances, a fresh coat of paint and benchtops go along way to tipping the balance in your favour. Similarly, bathrooms need to have cracked or stained basins replaced, fresh paint and possibly new tiles.
Option 3 – Serious Renovations
With accommodation at a premium in Australia, additional living spaces have become a major focus for buyers. While these options will require you to pay professionals to assist, they have shown to be very effective and increasing the value of your home.
Add a granny flat – an additional living space, especially if it’s self-contained is one of the number one items on the list of most Australian buyers. These spaces are handy for growing teenagers and also for assisting older relatives that need some family care.
Build outdoor entertaining areas – these days, a great outdoor area is more of the Australian dream than the house itself. A functional and beautiful outdoor area, that flows from the main part of the residence is highly regarded by buyers and will likely help you achieve a premium on value.
Roof restoration – street appeal is dependent on quite a few factors, like gardening, painting and pathways. However, many people forget to clean up the roof. Replacing broken tiles or sheets and repainting will give your house a big lift and help keep buyers interested.
Combining a few of these options can make quite a dramatic difference to the equity in your property, and many of them are quite simple to achieve. Bliss conveyancing has a large network of professionals in the property arena, so please reach out if you would like to get some further information.