Home equity is the portion of your home’s value that you own outright, which increases over time as you make mortgage payments and/or as your property’s market value grows. You can access your home’s equity through home loans and credit lines, which offer flexible terms that may be useful for purposes ranging from paying off debt to updating your property. Many homeowners also use home equity to invest in a business or purchase investment property.

To calculate your home’s equity, find out its current market value by researching recent sales of comparable homes in your neighborhood or hiring an appraiser for a professional assessment. Next, subtract your current mortgage balance from that number. Note that, like your mortgage, a home equity loan or line of credit is secured by your house, meaning you could lose your property if you fail to meet your repayment obligations.

Home Equity: Unlock the Value of Your Property

To maximize your home equity, aim for a large down payment when purchasing your home (or refinance to a lower mortgage rate). Make regular payments, including biweekly or monthly payments instead of just the monthly minimum, so you chip away at your principal faster. And stay in your home as long as possible to take advantage of property appreciation, which will increase your equity stake over time.