Equity release is a more straightforward way to fund your projects:

- You can access the equity in your existing property without selling it.

- Plans, build contracts and specifications may not be required unlike construction loans.

- The bank uses your existing property as security and can lend up to 80% of its value minus any existing mortgage.

- You can use these funds to buy land or fund a build with fewer restrictions

The calculations are transparent and based on your property’s current value:

- The bank will get a valuation of your property.

- They lend up to 80% of the property’s value minus any existing loans

For example, if your property is valued at $1 million and you owe $500,000, you could access up to $300,000 in equity (80% of $1 million = $800,000 minus your existing $500,000 loan).

The amount will vary depending on the lender’s policies and your financial situation.

Equity release has several benefits for construction projects:

- Straightforward: Plans or specs may not be required.

- Freedom: Use the funds as you want; no stage-by-stage drawdowns or bank valuations during construction.

- Versatility: For land purchase, construction or both.

While equity release is flexible, you need to consider the risks:

- More debt: You’re borrowing against your home, more debt.

- Property value risk: If property values drop, you could owe more than your property is worth.

- Future borrowing: It may impact your ability to borrow in the future.

- Less due-diligence: No bank valuations at each construciton draw-down stage means you must manage your project budget and quality closely.

Equity release is more straightforward:

Equity release:

- Based on your current property’s value and existing equity

- Plans, specs or costings may not required

- Funds are a lump sum or line of credit

Construction loan:

- Requires plans, specs and often a fixed-price building contract

- Bank valuations at each stage of construction

- Funds released as construction progresses