How to calculate the equity in your property

Equity is financial jargon for ownership. Even if you are currently paying off a property, you will have part ownership of it. And if (or when) you have fully paid off your property loan, you will have 100% ownership(equity).

You can calculate your equity in a property using this simple formula:

Your equity = the current market value of your propertyless any amount you owe on the property’s loan.

The less you owe, the more equity you will have (and vice versa). If you have fully paid off a property, your equity is its current market value.

Here are some examples:

EXAMPLE 1

‍The current market value of your property is $750,000 and you owe$500,000 on your property loan. 

Your equity = $250,000 (i.e.$750,000 less $250,000).

EXAMPLE 2

‍The current market value of your property is $750,000 and you owe$250,000 on your property loan. 

Your equity = $500,000 (i.e.$750,000 less $250,000).

EXAMPLE 3

‍The current market value of your property is $750,000 and you have fully paid it off. 

Your equity = $750,000 (i.e. the current market value of the property).

Using equity for property finance 

Lenders will usually be prepared to lend up to the 80% of the equity you have in any existing property. For example, if you have $250,000of equity, you can borrow up to 80% of that amount (i.e. $200,000).

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