Education costs in Australia continue to rise, and many families find themselves wondering how to fund their children's schooling or their own professional development. If you own property in NSW, you might already have the solution sitting right under your roof – your home equity.
Understanding equity and how it works for education funding
Equity is the difference between what your property is worth and what you owe on your mortgage. For example, if your home is valued at $800,000 and you owe $500,000, you have $300,000 in equity. Refinancing allows you to release equity to buy educational opportunities without selling your property.
Many NSW families are discovering that accessing loan options from banks and lenders across Australia through refinancing can provide the funds needed for:
• Private school fees
• University tuition costs
• Vocational training courses
• Professional development programs
• Study abroad experiences
How refinancing for education works
When you refinance to access education funding, you're essentially replacing your current home loan with a new one for a larger loan amount. The difference between your old loan balance and the new loan amount becomes available cash that you can use for educational expenses.
The application process typically involves:
- Property valuation to determine current equity
- Assessment of your financial situation
- Review of banks statements and income documentation
- Loan structure planning to suit your needs
Ready to get started?
Book a chat with a Mortgage Broker at Personalised Finance today.
Timing considerations for your refinance
If your fixed rate period ending soon, this presents an ideal opportunity to review your loan structure. You can potentially access a lower interest rate while simultaneously releasing equity in your property for education costs. This timing allows you to address two financial goals at once.
Many families also choose to change your loan term when refinancing for education. Extending the loan term can reduce loan repayments, making the additional borrowing more manageable within your household budget.
Interest rate options and loan structures
When refinancing for education, you'll need to decide between variable interest rate and fixed interest rate options. Each has its merits:
Variable Interest Rate Benefits:
• Potential to benefit from rate decreases
• Usually lower initial rates
• More flexibility for extra repayments
Fixed Interest Rate Benefits:
• Predictable repayments for budgeting
• Protection against rate increases
• Peace of mind during study periods
Additional benefits of refinancing
Beyond accessing education funds, refinancing can help you consolidate debts and streamline your finances. If you have credit card debts or personal loans with higher interest rates, incorporating these into your refinance can reduce your overall interest burden.
A comprehensive home loan health check during the refinance process may reveal opportunities for improved loan features, more flexible repayment options, or access to offset accounts that can help manage your finances during study periods.
Working with mortgage broking professionals
Refinance interest rates and loan terms vary significantly between lenders. At Personalised Finance, we help you access loan options from banks and lenders across Australia, ensuring you find suitable financing for your educational goals.
Our streamlined application process includes helping you check eligibility for special lender policies that might benefit your specific situation. Some lenders offer preferential terms for education-related borrowing or provide more flexible serviceability calculations.
Planning for education costs
When considering refinancing for education, think about the total costs involved. Beyond tuition fees, consider:
• Textbooks and learning materials
• Accommodation costs for away students
• Living expenses during study periods
• Technology and equipment requirements
• Potential income reduction during study
Education represents an investment in your family's future. Whether you're funding your child's schooling or your own career development, using your property equity can provide access to opportunities that might otherwise remain out of reach.
The key is ensuring the loan structure aligns with your long-term financial goals while providing the flexibility needed during study periods.
Call one of our team or book an appointment at a time that works for you to discuss how refinancing can help fund your educational aspirations.
