How does Equity work?

Sean Murphy

We hear the word "Equity" all the time. But how does using it work?

How does Equity work?

Equity is the difference between the current market value of your home, and the outstanding balance remaining on any loan secured against the property.

In other words, it’s the portion of the property which you own outright.

So a very common use of Equity could be a scenario where:

  • Someone bought a home in 2015
  • then in 2022 the property went up in value $400,000
  • So they can actually borrow money against that new value in the property to do things like, Invest in more property, pay for renovations, consolidate debt, or buy consumer goods.
  • The most popular thing we help with is using equity to help set up a property portfolio

It’s important to note: Your equity can increase or decrease depending on the current property valuation, as well as if you make extra repayments or redraw on your loan.

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