HOW YOU CAN BUILD WEALTH WITH EQUITY RELEASE

Equity release is a key topic we frequently discuss with our clients at APFG. Currently, Australia stands as one of the wealthiest nations globally, largely thanks to the escalating property prices over the past decade. The average wealth per adult now sits at a remarkable $496,819.

Yet, while properties may symbolise wealth on paper, the real question is: what does this mean for homeowners’ current financial status and their future aspirations?

“A lot of people have their equity tied up in their primary or secondary homes, and while this promises long-term capital growth, it isn’t benefiting them in the present,” says Matt Sully, CEO of APFG. “We often ask two crucial questions: ‘How much equity do you have?’ and ‘What are you currently doing with it?'”

What is Equity Release?

Equity release refers to accessing the value accumulated in your home. It’s a significant, often untapped, asset. However, it shouldn’t be viewed as ‘free money’ but rather as a strategic tool for wealth enhancement. “If you have equity, you should be leveraging it,” Sully advises, especially if it can actively improve your financial situation.

When executed correctly, equity release can play a pivotal role in a robust wealth creation strategy.

Here are scenarios where equity release can be a wise financial decision:

Expanding Your Property Portfolio: Leveraging home equity to invest in additional properties can be a lucrative move. It opens doors to new income sources, like rental earnings. At APFG, we guide clients towards cash-flow positive investments, including fractional ownership options.

Fueling Additional Income Streams: Equity release can serve as seed capital for various wealth-building ventures. As Sully notes, “Securing a large raise or a second job isn’t feasible for everyone. However, a $200,000 property investment might yield an extra $30-40,000 in annual income.”

Home Enhancements: Reinvesting equity into your property through renovations can significantly increase its value, offering both financial gain and an improved living environment.

Diversifying Investments: Smart investors diversify their portfolios. Equity release can facilitate this, spreading risk and potentially boosting returns. “This is why our clients are attracted to fractional property investments with us,” Sully states. “It enables them to diversify across multiple properties and markets.”

Facilitating Major Investments: Whether it’s for real estate, business ventures, or education, equity release can provide the necessary capital for significant investments. As always, it’s vital to consult a financial advisor to weigh both short-term and long-term benefits.

Leveraging Growth Opportunities: Equity in your home can be a key to capitalising on timely market opportunities. There are instances where market and banking policy changes affect investment opportunities. Being aware of your equity status is crucial in such scenarios.

Enhancing Retirement Plans: Using home equity to add assets to your portfolio and generate income can significantly fortify your retirement plan, adding an extra layer of financial security.

Expert Guidance with APFG

The concept of equity release might seem straightforward but entails complex considerations. Given that your home, often your most valuable asset, is used as collateral, it’s imperative to approach this with careful thought and professional advice. Consulting a financial advisor is essential to understand market trends, potential risks, and the broader implications of equity release.

Used wisely, equity release can be a transformative financial instrument. It’s about unlocking your home’s latent value to elevate your financial standing, be it through property investment, asset diversification, or reinforcing retirement strategies.

Connect with our experts at APFG.. Our qualified financial advisors are ready to evaluate if equity release is a fitting choice for your financial objectives and circumstances. While the reasons for equity release vary, the core principle remains: it should advance your financial well-being.