What is equity and how can it help you grow your property portfolio?
In property investing, equity is the difference between your property’s market value and the remaining balance of your mortgage or any outstanding loans. Essentially, equity represents the portion of the property that you own outright.
How to Calculate Equity
To understand equity, here's a simple formula:
Equity = Market Value of Property - Outstanding Mortgage/Loan Balance
For example, if a property is worth $500,000 and the mortgage balance is $300,000, the equity in the property would be $200,000.
Why Is Equity Important for Property Investors?
As your property value increases or you pay down your mortgage, your equity will grow. This is where equity becomes crucial in expanding your property portfolio. You can access up to 80% of your equity to secure further loans, such as a home equity loan or a line of credit, allowing you to finance more property investments and build wealth faster.
Thanks for reading, see you in my next post.
Erin x
Erin May Watt
