What is Equity?

Equity is one of those common mortgage terms that some people are unfamiliar with.  Equity is, simply put, how much your home is worth minus how much you owe the bank.

It’s easy to work out how much equity you have with this simple equation.

Home worth – debt = equity.

So if your home is worth $400,000, and you have $300,000 that you owe to your bank, you effectively have $100,000 worth of equity.

There are two ways you can access equity. 1; by your property increasing in value and 2; by minimizing how much money you owe the bank by repaying your loan faster.

What you can use the equity in your home for:

– Home renovations

– Buying shares

– Buying more property

There are many benefits in releasing equity in your home loan for other investments. The important thing is to consult us and your Accountant for advice before committing to any new purchase or renovation.