Also called: Cash-out, Equity draw
Equity release
Equity release is borrowing against the difference between an asset's value and the debt secured against it, converting accumulated value into available cash. It applies to both property and, through leaseback structures, to plant and equipment.
What is an equity release?
Equity release is borrowing against the difference between an asset's value and the debt secured against it, converting accumulated value into available cash. It applies to both property and, through leaseback structures, to plant and equipment.
Example
A warehouse worth $1.8 million with a $900,000 loan may support releasing a further $360,000 at a 70% LVR.
Why it matters
It is usually cheaper than unsecured funding, but it increases the debt secured against an asset you rely on.