When you cash out equity, you’re turning the part of your home you own into real money. Also known as equity withdrawal, it’s a way to access the value your home has built up over time—without selling it. Most people do this when they need cash for big expenses: home repairs, medical bills, or even paying off high-interest debt. It’s not magic. You’re borrowing against the difference between what your home is worth and what you still owe on your mortgage.
There are two main ways to do it: a home equity loan, a lump-sum loan secured by your home’s value, or a HELOC, a revolving line of credit you can draw from as needed. Both use your home as collateral, so if you can’t pay, you risk losing it. That’s why lenders check your credit, income, and how much equity you actually have. Most require you to keep at least 15-20% equity after borrowing. You can’t just take out 90% of your home’s value—even if you own it outright.
Some people use cash-out equity to fix up their house and boost its value. Others use it to pay off credit cards with higher rates. But it’s not a free pass. Interest rates on these loans are usually lower than credit cards, but you’re trading unsecured debt for secured debt. That’s a big shift. And if home values drop after you borrow, you could end up owing more than your house is worth. That’s called being underwater. It’s rare, but it happens—especially after market swings.
Before you move forward, ask yourself: Why do I need this money? Is there another way? Could I refinance instead? Or maybe a personal loan makes more sense? The posts below cover real cases: how much people actually borrow, what rates they got, how it affected their credit, and when it backfired. You’ll see the numbers, the mistakes, and the smart moves. No fluff. Just what works—and what doesn’t—when you’re thinking about cashing out equity.
Find out exactly how much equity you can release from your home in New Zealand based on your age, property value, and health. Learn the real limits, hidden costs, and smart alternatives before you commit.
