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. In New Zealand, building home equity is a key financial goal for most homeowners.

2. How Does the Calculator Work?

The calculator uses the simple home equity formula:

Where:

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

Explanation: This formula calculates the net value you hold in your property after accounting for your mortgage debt.

3. Importance of Home Equity Calculation

Details: Knowing your home equity is crucial for financial planning, applying for loans, refinancing decisions, and understanding your overall net worth in the New Zealand property market.

4. Using the Calculator

Tips: Enter your home's current market value and outstanding mortgage balance in NZD. Use recent property valuations and accurate mortgage statements for best results.

5. Frequently Asked Questions (FAQ)

Q1: What is considered good home equity in NZ?
A: Generally, having 20% or more equity is considered healthy as it helps avoid Lenders Mortgage Insurance (LMI) and provides better loan terms.

Q2: How can I increase my home equity?
A: Through mortgage repayments, property value appreciation, and home improvements that increase your property's market value.

Q3: Can I access my home equity in New Zealand?
A: Yes, through refinancing, home equity loans, or line of credit facilities, but this increases your mortgage debt.

Q4: How often should I calculate my home equity?
A: It's good practice to review your equity position annually or when considering major financial decisions.

Q5: Does negative equity occur in NZ?
A: Yes, when your mortgage balance exceeds your property's value, which can happen during market downturns.