When I meet with clients, one of the first thing they want to know is how much equity they have in their home. It’s not just interesting to know, it can be helpful to know if you do have plans to use some of that equity to do some renovations, buy an investment property or even buy a new car.
As interesting as it is to know, many of my clients don’t know how to work out what Equity they have available and this can mean they put their plans off thinking they’re unachievable or, worst still, they think they have the equity available when they don’t.
To find out how much equity you have in your home all you need to do is take the value of your home multiple it by 80% (when you lend over 80% of the value of your property you are charged Lenders Mortgage Insurance).
This will give you the maximum you can borrow up to using your property. Then you subtract your current loans against that property and the amount you’re left with is how much equity you have in your home.
To give you an example lets say you have a home with a valuation of $700 000.00 and your home loan is currently $320 000.00 with a limit of $350 000.00. You would work our your Equity like this…
700 000.00 x 80% = 560 000.00 – 350 000.00 = $210 000.00
In this scenario there is $210 000.00 available equity to put towards an investment property, borrow for renovations or something else depending on your plans.
In order to work out the above you need to know what the value of your property is and the best way to do that is either with a Valuation or Property Report. To find out more about the different types of valuations go here.
If you want to know more about Equity or would like a FREE property report to see what your home is valued at please contact me today.