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Home Equity Percentage Formula:
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Home equity percentage represents the portion of your property that you truly own, calculated as the difference between your home's current market value and the outstanding mortgage balance, expressed as a percentage of the total value.
The calculator uses the home equity percentage formula:
Where:
Explanation: The formula calculates what percentage of your home's value you own outright, excluding the portion covered by your mortgage.
Details: Knowing your home equity percentage is crucial for refinancing decisions, home equity loans, property investment strategies, and understanding your overall financial position in the New Zealand property market.
Tips: Enter your home's current market value and outstanding mortgage balance in NZD. Ensure values are accurate for a precise equity percentage calculation.
Q1: What is considered a good equity percentage in NZ?
A: Generally, 20% or more is considered healthy. Below 20% may require lenders mortgage insurance (LMI) for refinancing.
Q2: How often should I calculate my home equity?
A: It's recommended to reassess annually or when considering major financial decisions like refinancing or applying for a home equity loan.
Q3: Does home improvement affect equity percentage?
A: Yes, renovations that increase your home's value will improve your equity percentage, provided your mortgage balance doesn't increase proportionally.
Q4: Can equity percentage be negative?
A: If your mortgage balance exceeds your home's value (negative equity), the percentage would be negative, though this calculator shows 0% in such cases.
Q5: How does equity percentage affect borrowing power?
A: Higher equity percentages generally improve borrowing capacity and may qualify you for better interest rates from NZ lenders.