As a property owner, do you know how much equity you have in your property(s) in the current market? Equity changes as market conditions change, and right now in such a booming market, it’s highly likely your equity has risen.
What is equity?
Equity is the amount that you actually own outright of your property; sitting between what you owe and what your property is worth. Effectively, it is the amount of money that you would receive cash-in-hand if you sold your property today and paid off your mortgage immediately.
For potential investors, the level of equity in your property can determine the difference between leaping quickly into your next investment through refinancing or borrowing against the equity or waiting until you’ve accrued enough funds in savings to purchase again.
For owner occupies, equity in a property allows you to determine your overall wealth position and potential buying capacity, as well as providing some ‘peace of mind’ in the event of the local house prices changing, particularly if the movement is upwards…which it generally is.
How do you determine what level of equity you have? It’s simple.
- How much do you owe on the property?
- What could the property sell for today?
The amount of equity in the home is the difference between the two.
Appraisals or local market comparisons (CMA’s) can assist with deciding whether or not there is a chance that you have enough equity to borrow against (if that’s on your agenda). A reputable local agent should be able to assist you with a fairly accurate figure on what you could sell for; there’s also plenty of information online about what properties have sold for in your local area/neighbourhood.
Generally, to refinance using your equity, you do need to leave a portion in the home, usually around 20 per cent. However, this varies from lender to lender, so it’s a good idea to talk to a broker who can navigate the lending criteria that different institutions have. If you wish to access your equity, you will still need to jump through the necessary hurdles to obtain a new loan.
During your time of ownership, you may have undertaken substantial renovations and the market may also have moved upwards significantly. If you want to know what your property is worth right now, today – here at Wright Place; we are the local experts and can provide you with a realistic figure via an obligation-free appraisal. You may be pleasantly surprised!