Home Equity
The portion of your property you truly own, its market value minus the outstanding mortgage.
Home equity grows two ways: as you repay your mortgage principal and as the property's market value rises. It is often a household's largest single asset and a major component of net worth. You can borrow against it through products like home equity loans, but doing so puts your home on the line as collateral. Building equity steadily is a cornerstone of long-term wealth, while tapping it carelessly can undo years of progress. Assetli includes your property value and mortgage balance so your equity is reflected in your net worth.
Example
A home worth $400,000 with a $250,000 mortgage left gives you $150,000 of home equity, the part you actually own.
Try in Assetli
Read more
Related terms
Mortgage
A long-term loan secured by real property, used to finance the purchase of a home or investment property, typically repaid over 15–30 years.
LTV (Loan-to-Value Ratio)
The ratio of the loan amount to the appraised value of the property, expressed as a percentage. Lower LTV means less risk for the lender.
Net Worth
The total value of all your assets (cash, investments, property) minus all liabilities (loans, mortgages, credit card debt).
Refinancing
Replacing an existing loan with a new one, usually to secure a lower interest rate or better terms.
Explore more terms
Property Appraisal (Valuation)
A professional estimate of a property's market value, used by lenders, buyers, and sellers.
Amortization
The process of gradually paying off a loan through regular payments that cover both principal and interest, with early payments being mostly interest.
Rental Yield
The annual rental income from a property expressed as a percentage of its purchase price or current market value.