What is Home Equity? How Can I Benefit?

What exactly is home equity?

Equity is an important concept to any homeowner, and it is more important than many may think. Equity is the value of your home minus your outstanding mortgage, so as the value of your home rises, your equity also rises correspondingly, even with no extra outlay from you. As an example, if your home is worth £100,000, and you have already paid £80,000 on the mortgage and have £20,000 outstanding, you have £80,000 in equity to draw from. Some lenders will even loan you up to 125% of your home’s value.

You’ll most likely gain more equity as time goes by, which in turn translates to more wealth (as your home is worth more and you can borrow more from that worth). According to surveys, the equity of an average home in Britain today rises by £50 per day and has risen £18,000 in the past year.

As equity levels rise, homeowners pay off more of their mortgage and subsequently gain increasing equity in their homes. The portion of a home’s value that is not still left unpaid in a mortgage is how much is available in equity, and this wealth can be translated into borrowing power by taking out a secured loan. The equity can be used to fund anything, ranging from a wedding, a loan for a boat, a caravan, education, or even that luxury holiday you’ve been wanting.

You’ll benefit from using your equity, too: these types of loans carry lower interest rates than unsecured loans. You can even deduct the interest on a home equity line of credit from your taxes in most cases! What’s stopping you from checking out Spot Loans today?