ANZ Home Equity Loan: Freedom or “Fee-dom”?

Investing in property has become increasingly popular over recent years, and homeowners are turning to home equity loans to help them to afford an investment property.

The ANZ Home Equity Loan is a line of credit loan which allows borrowers to tap into equity they have built up in their home. The funds are available to eligible borrowers for any personal purpose but are best used when investing in property or something that will appreciate in value, rather than a holiday or car which may lead to further debt.

Home equity loans such as the one offered by ANZ are not suited to everyone and require discipline. Some borrowers with easy access to funds can get over their heads in debt by using their home equity almost as a giant credit card. This type of borrower would be better suited to a more traditional home loan that needs principal and interest repayments to be made regularly.

ANZ allows access to your home equity through a number of methods including cheque accounts, phone banking, internet banking and ANZ ATM withdrawals. There are restrictions on this access, however, with only three free withdrawals permitted each month. Any additional withdrawals will cost $5 per transaction.

The minimum amount you can borrow with ANZ’s Home Equity Loan is $20,000 and the maximum amount is 80% of the value of your existing property. As this type of loan is an ongoing line of credit, there is no set loan term.

ANZ Home Equity Loan uses your home as security against the amount you are borrowing, so you should always be sure you can make the regular repayments as required. ANZ Home Equity repayments are required monthly with a minimum repayment of either the sum of interest, applicable bank fees and government duties, or $10, whichever is greater.

A Loan Approval Fee of $500 applies. According to ANZ, this covers the preparation of security documents, application and loan establishment costs. A discount of $100 may be available to borrowers who are ANZ credit card holders, make loan repayments from an ANZ account, have their salary paid into an ANZ account or buy into one of several ANZ insurance products.

The interest rate offered by ANZ is higher than that offered by many non-bank lenders, and a Valuation Administration Fee of $100 may also apply, which would contribute to the overall cost of your home equity loan.

When exploring your home loan and investment options, seek the advice of a financial broker to find the best solution for your financial situation.

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