Building equity in your property is one of the most sought after things to have happen when you own a property. Ideally equity will go up and not down. This sounds like a silly comment, but it’s an important one to consider long term, especially when that property has a mortgage on it.
If the value of your property does not drop, then you will build equity in your property as you repay principal on your mortgage loan. The equity in your property may also increase if the property value increases.
What can I do to increase the equity in my home?
There are some things that you can do to help you with the equity in your home. If you have a home loan, one of the simplest things that you can do is to pay off a little bit extra on your repayments each month. This reduces the amount that you owe and therefore means that you now have more equity in your home.
This is by no means some sort of investment strategy, it’s just using the basics of paying off your home loan as soon as you can.
If you have no debt on your home, you have 100% equity. Well done!
Keep an eye on the value of your home
Because equity is based on the value of the property that you own, you might not know about how to best keep an eye on that value. When you got your home loan, the property will have been valued by your lender.
This could have been done in a number of ways and once done, it established the value of the property. This value was one opinion at one point in time. You might have paid more or less for it though, but for the purposes of lending – a valuation is key.
What sort of tools are out there that I can use?
Trov – this is a good little app for both iOS and Android users that allows you to catalogue things that you own and then get them insured. One things that people might not know about this app, is that it uses CoreLogic data to constantly update the estimated market value of the real estate property that you put in. Handy and FREE!
iOS users – grab it from the app store
Android users – get it from google play