Mortgage equity is the difference between what you owe on your mortgage and the current value of your property.
In simple terms, equity is how much of your home that you “own”. It’s the amount that you’ve paid off your mortgage, plus how much you paid for your deposit.
If the value of your home has gone up then your equity also includes the difference between the price you bought it for and its new value.
While you’re paying off your mortgage, you’re building up equity. Every monthly repayment you make helps increase the equity in your home.
For example:
Your house is worth £200,000.
You have £170,000 still to pay on your mortgage.
The equity you have in your home is £30,000, so 15% equity.
Once you’ve paid your mortgage off, you’ll have 100% of the equity.
