Home equity is the difference between your current property value and the outstanding balance on your home loan. If you have owned the property for some time, it is likely that you have accumulated some equity. The reason why home equity is useful is because you can use it as a deposit towards your next property purchase.
Estimate your available equity using our home equity calculator.
How does it work:
To estimate your available equity, start by entering the property market value, outstanding loan balance, interest rate and remaining loan term.
Then you should indicate whether you are planning to keep the property and rent it out, or sell it as this would impact the amount of available equity.
Planning to rent out the property: Your available equity equals the market value of the property minus the outstanding loan balance up to 80% loan-to-value ratio. For example, if your property is worth $1,000,000 and your outstanding loan is $500,000, your available equity is $300,000.
Planning to sell the property: Your available equity is determined by the market value of your property minus your oustanding mortgage and any selling costs. Typical selling costs to factor are real estate agent fees and conveyancing fees.
Next steps are to determine whether leveraging the equity in your property will give you the sufficient deposit amount and borrowing capacity to purchase your next property.
