What is Equity and how do I use it?

Equity is the portion of your property that you truly "own." It is the difference between what your property is worth on the market today and the amount you still owe on your mortgage.

Key Concepts

• Market Value: What your property would likely sell for in the current market.
• Loan Balance: The remaining principal amount you owe the bank.
• Usable Equity: Banks generally let you borrow up to 80% of your property's value. Your "usable" equity is the gap between that 80% mark and your current debt.

How it works in PropKeeper

PropKeeper calculates your estimated equity by taking your Estimated Property Value and subtracting your Current Loan Balance.

$$Equity = Market Value - Loan Balance$$

How can I use my Equity?

1. Buying an Investment Property: Using the equity in your home as a deposit for a second property.
2. Renovations: Tapping into equity to fund upgrades that increase the property's value.
3. Consolidating Debt: Using the lower interest rate of a mortgage to pay off higher-interest debts.

Pro Tip

Look at your LVR (Loan-to-Value Ratio). Savvy investors aim to keep their total LVR across their portfolio below 80% to maintain a safety buffer against market fluctuations.