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Find out what mortgage equity and negative equity is here.
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.
There are lots of ways the equity in your property can increase:
To roughly calculate how much equity you have in your home:
Building the amount of equity in your home could help you to buy a more expensive home in the future. It can also mean you are less likely to have negative equity.
The best way to build equity is to pay a bigger deposit when you buy your property.
For example:
If you’re able to overpay on your mortgage, you’ll build equity faster. Make sure you check if there are any limits on overpayments. Overpaying more than your lender allows could mean you’ll be hit with an early repayment charge.
The content on this page is for reference and does not constitute financial advice. For impartial financial advice, we recommend government bodies like MoneyHelper.