If you’re just getting started in the property market, you’ll hear the word ‘equity’ come up frequently. So, what is it?

Equity is the part of something; an asset, house or company which you own. For example, you may have equity in part of the value of your house.

Assets - Liabilities = Equity

Once you own your home and start making repayments, you build your equity.

For example:
$400,000 valued home (asset)
$250,000 mortgage balance owing (liability)
$400,000 - $250,000 = $150,000 (equity)

Put simply, equity is the difference between the value of your home and what is owed on it.

You can increase your equity by paying off your mortgage quicker or by increasing the value of your home. You can check out 5 tips to increasing the value of your home for ideas.

HomeStart’s flexible home loan products allow home owners to make voluntary repayments which are over and above the minimum instalment required.

You can find out how this works in Loan repayments explained.