I read an article in Rotorua’s Daily Post newspaper titled, “Home Owners Sitting Pretty”. The article starts off by saying, “Rotorua home owners can sit back feeling more financially comfortable with news property values have skyrocketed almost 25 percent in the past year”.

Mmmm so you have more equity? Well on paper at least!

But is now the time to borrow against that increased equity? It is very tempting for home owners to make use of the increase of house prices to top up their home loans and of course the banks are rubbing their hands together waiting to throw money at you. If you can use equity to borrow against something that increases in value that’s great as that’s leverage. If you borrow that extra money for something that doesn’t increase in value and also doesn’t provide any return, you’ll simply add more expense to your monthly budget and your household finances. By doing this the only thing rising could be your stress levels!

Rising values are only one way of increasing your equity and we cannot always rely on this.  A sure fire way of increasing equity, however, is by reducing debt as fast as possible which we can help with. It is worth making an appointment to see a New Zealand Home Loans stress manager to see just how we can help you achieve your goals and reduce your debt.

The information contained in this article is of a general nature and should not be taken as advice. It reflects the opinions of the writer only and does not necessarily reflect the opinions of New Zealand Home Loans.