The equity in your home is the total value of the property, minus the outstanding mortgage. For instance, if your home is worth £300,000 and you have just £80,000 left to pay on the mortgage, you have £220,000 in equity.
When you take out a 50% mortgage, you should have 50% equity from the get-go. However, if your property goes up in value, for instance, because house prices rise or you make improvements, your equity rises too.
Imagine, you bought a property worth £240,000 with a deposit of £120,000. At the time, you had £120,000 in equity. If the value of the house shot up to £300,000, but you still only owed £120,000 on the mortgage, you’d have £180,000 in equity. As you pay off your mortgage, your equity grows too as you own more of the house. If house prices fall, you’d have less equity.
You could ask your lender for an estimation of how much equity you have, but if you’ve made improvements to your home or think the value has changed substantially, get it professionally valued instead.
