Knowledge Centre

Home Equity

What is Home Equity and How is it Calculated?

Home equity refers to the current market value of your home (which won’t necessarily be the price you purchased it for), minus the amount of money still owing on your home loan.

To give you an example, say your home is valued at $800,000 and you still owe $300,000 on it, you’ll have $500,000 of equity. Keep in mind that as the market value of your property can go up or down, so too can the equity you have in it rise and fall.

To find out how much equity you have currently, you can organize a property valuation through various banks, lenders and independent agents. Also note, even if you do have equity in your home, you won’t always be able to borrow against it.

Your lender will look at additional factors, such as your age, income, debt levels, the property’s location and whether you have any children. This is because all of these factors could affect how much you can afford in repayments. With that in mind, if you do have equity, you’ll want to find out how much of it is ‘usable’.

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