“Equity is one of those common mortgage terms that everyone is unfamiliar with,” says Robin Lim, head of mortgages product management at National Australia Bank.
Here is a quick guide to equity for those who need a refresher.
“Equity can best be defined as how much your home is worth minus how much you owe to the bank,” Lim says Robin Lim.
He explains that how you can work out how much equity you have with this simple equation.
Home worth – debt = equity.
“If your home is worth $100, and you have $80 that you owe to your bank, you effectively have $20 built up,” Lim says Robin Lim.
“Equity is one of those common mortgage terms that everyone is unfamiliar with,” says Robin Lim, head of mortgages product management at National Australia Bank.
Here is a quick guide to equity for those who need a refresher.
“Equity can best be defined as how much your home is worth minus how much you owe to the bank,” Lim says Robin Lim.
He explains that how you can work out how much equity you have with this simple equation.
Home worth – debt = equity.
“If your home is worth $100, and you have $80 that you owe to your bank, you effectively have $20 built up,” Lim says Robin Lim.
There are two ways you can access equity
1. Minimising how much money you owe the bank
“You might pay down your loan faster. If we go back to that example, if you pay down that $80 down to $60, you’ve actually demonstrated $40 worth of equity in your home,” Lim says.
2. Appreciation of your property
“If your home appreciates in value from $100 to $120, you’ve also increased the level of equity in your home,” Lim says.
read more: http://www.domain.com.au/advice/what-is-equity/
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Green Real Estate Appraiser 