Using the equity in your home can be a clever way to finance an aircraft purchase, often securing you a lower interest rate than a typical secured asset loan.

Australian banks are quite open to providing cash out for significant lifestyle assets. For the right customer the process is relatively straightforward.

However, there's a major risk. Many people make the mistake of adding the cost of the plane to their 30-year mortgage and doing the loan term over 30 years. This means you'll be paying interest on the aircraft for decades, long after you've likely sold it. The total interest paid can become enormous.

The smarter strategy is to isolate the aircraft loan and pay it off over a much shorter term, ideally 5 to 10 years. This clears the debt faster and saves you a significant amount in interest. Remember you'll need to be able to repay this loan over the shorter time frame and normal lending criteria will apply.

Specialist aircraft finance brokers can help you compare these options and structure a loan that suits your purchase, we can do a quick calculation on what this sort of scenario can look like for you and ensure your high-flying dream doesn't become a long-term financial burden.

Visit the Australian Aviation Finance website for more details