1. What is Home Equity?

Home equity represents the portion of your property that you truly own. It's the difference between your home's current market value and the outstanding balance on your mortgage. For Westpac customers in New Zealand, understanding your home equity is crucial for financial planning and potential borrowing.

2. How Does the Calculator Work?

The calculator uses the simple home equity formula:

Where:

• \( E \) — Home equity (NZD)
• \( V \) — Current market value of your home (NZD)
• \( B \) — Outstanding mortgage balance (NZD)

Explanation: This calculation shows how much of your property you actually own versus how much is still owed to the bank.

3. Importance of Home Equity Calculation

Details: Knowing your home equity helps with refinancing decisions, determining borrowing capacity for home improvements or investments, and understanding your overall financial position. Westpac uses equity calculations to assess loan-to-value ratios (LVR) for mortgage applications.

4. Using the Calculator

Tips: Enter your home's current market value and your remaining mortgage balance in NZD. Use recent property valuations for accuracy. Both values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What is a good amount of home equity?
A: Generally, having at least 20% equity is considered good as it helps avoid Lenders Mortgage Insurance (LMI). The more equity you have, the better your borrowing position.

Q2: How often should I calculate my home equity?
A: It's recommended to review your home equity annually or when considering major financial decisions, as property values and mortgage balances change over time.

Q3: Can I use my home equity to borrow more?
A: Yes, Westpac and other lenders often allow you to borrow against your home equity for various purposes, subject to lending criteria and serviceability assessments.

Q4: What if my home equity is negative?
A: Negative equity occurs when your mortgage balance exceeds your home's value. This situation requires careful financial planning and consultation with your Westpac mortgage advisor.

Q5: How does Westpac calculate property value for equity purposes?
A: Westpac may use recent sales data, automated valuation models, or formal property valuations depending on the loan amount and purpose.