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Home equity calculator

  • Find out how to calculate how much equity you have in your home
  • Learn what you could do with your home equity and how you could access it with equity release
  • We'll explain the benefits, risks and costs of equity release

What is equity in your home?

Home equity is the value of how much of your home you own outright.

You calculate the equity in your home by subtracting your outstanding mortgage from its current market value. Or to look at it another way, it's made up of the deposit you put down when buying your home, plus all the mortgage payments you've made since. You'll also need to take into account property appreciation or depreciation and subtract any other debts registered against it, such as a secured loan.

Your home equity builds over time as you make mortgage payments each month, all the way until you've paid off 100% - giving you 100% home equity. Your home equity will also increase if your home goes up in value and will decrease if your home value goes down.

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Why is your home equity important?

Understanding your home equity can be worthwhile for a range of reasons.

If you have an existing mortgage you may want to remortgage to get a better rate for example, or to borrow money against your home. In both cases lenders will look at how much equity you have to help them determine how much they're willing to let you borrow and at what rate.

Both options can give you greater financial flexibility if you have goals such as making home improvements or supporting loved ones, but lack the spare funds to achieve them otherwise.

Knowing your home equity isn't only useful for borrowing though. If you decide it's time to sell your home, you can put the equity you've built up towards buying another property.

But you need to know how to calculate your home equity before you begin exploring the different ways to use it.

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How to calculate home equity

Calculating your home equity is relatively simple if you have your property's value, mortgage balance and any remaining liabilities secured against it to hand.  If you want to work out your equity yourself, you can follow these steps.

Your home equity is calculated using what your home is currently worth, rather than what you originally bought it for. Note that house prices have changed significantly in recent history. There are a few different ways to get an estimate of your home's current market value.

The most accurate is to hire a professional surveyor or local estate agent. Estate agents may give you free valuations if you're thinking of selling your property, and it can be helpful to get two or three to find an average. A surveyor is likely to charge you a fee regardless of your intentions.

There are cheaper and faster options if you only need an estimate. Websites such as Zoopla allow you to look up how much similar houses in your area have sold for recently - or use a house price calculator for a quicker answer. You can also look at local asking prices on sites like Rightmove, which should at least be based on estate agent valuations.

Keep in mind that lenders may ask for a professional surveyor valuation if you decide you do want to use your equity for borrowing, however. This will take into account more factors than an estate agent estimate, and will give a more accurate valuation.

Next you need to add up any debts that are secured against your home. This may simply mean finding out your remaining mortgage balance, which should be available on your most recent paper statement or through an online platform. You could also call your mortgage provider directly for this information.

If you have any other debts secured against your home such as a loan, you should be able to find your remaining balance in similar ways. You can then combine these figures to find your total remaining debt against your home.

Calculating the equity in your home from here is simple: just subtract the second figure (your total remaining debt) from the first (your home's current value).

As an example, you could have:

  • A property worth £250,000

  • An outstanding mortgage balance of £150,000

  • An outstanding secured loan balance of £5,000 So, to calculate the equity in your home:

  • £250,000 minus £155,000 (£150,000 + £5,000) = £95,000

In this case, £95,000 is the equity you have in your home.

What is negative equity?

If the total amount you owe on a mortgage and any other debts secured against your home is higher than the current value of your home, you'd have what's described as negative equity.

Here’s an example of how negative equity works:

  • Your property has an outstanding mortgage balance of £200,000

  • When you first purchased your home your property value was £200,000, but due to market fluctuations, it is currently valued at £190,000

  • In this case, you are in negative equity by £10,000

Having negative equity can make things trickier if you want to explore options such as selling your home or remortgaging.

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Pros and cons of using your home equity

You've worked hard to build up equity in your home, and there are some general pros and cons to drawing from it. There'll also be more specific benefits and drawbacks to the various uses you've read about above, so it's important to carefully research them too and seek financial advice tailored to your situation.


  • Having a high amount of equity increases your options in life, whether you want to move, live more comfortably, consolidate debt, support loved ones or upgrade your home.

  • If you do want to borrow money, securing finance against your home can allow you to access higher amounts than with unsecured finance, and possibly at better rates.


  • Drawing from your equity now will reduce the value of your estate, affecting how much you can leave to your loved ones when you pass away.

  • If you draw a high amount of equity and the housing market takes a dip, it's possible that you could end up owing more than your home is worth. This isn't the case with equity release through Key, however.

  • Borrowing against your home comes with the risk of having your property repossessed if, for whatever reason, you become unable to keep up with repayments.

How to increase your home equity

If you've calculated your home equity and found it to be lower than you'd hope or need, there are a few basic ways to increase it.

The most straightforward is to stick to your mortgage repayment schedule and keep building equity each month.If you want to speed things up you may be able to overpay by a little each month, though make sure to check the terms of your deal and whether you could incur early repayment charges.

Keeping your home in good condition meanwhile will help protect its value. As well as general upkeep, there may be improvements you can make to increase its market appeal and therefore your equity. Make sure to consult professionals about how much value different changes can add versus how much they'll cost you to install, however.

Keep in mind that the health of the economy and housing market ultimately dictate your home's value. Major rises or falls in property prices may increase or reduce your equity regardless of your mortgage status or the condition of your home.

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What can you do with your home equity?

Once you've calculated your home equity, you could explore using it in a few different ways:

  • When moving home

  • Remortgaging

  • Taking out a home equity loan

  • Access your home equity with equity release

So, how does your home equity affect each of these situations?

If you're a homeowner but thinking about moving, you can put your home equity straight towards your next property. The money you've built up could help you climb the property ladder to a higher value home. Alternatively, you may want to free up funds by downsizing and moving to a cheaper property.

Whatever the case, having a lot of equity could allow you to put down a bigger deposit and borrow less - potentially resulting in a lower LTV mortgage with a cheaper interest rate.

Remortgaging involves taking out a new mortgage on the home you're currently in. A key reason people remortgage is to get a cheaper deal and save money, often when their current deal is due to end. Your home may also have gone up in value.

Having more equity typically means you can access better deals as you pose less of a risk to lenders. Still, it's always worth checking details such as early repayment charges on your current deal and what mortgage rates are available at the time.

A home equity loan is a type of secured loan that's backed up by the equity in your home, rather than using other assets such as cars (or being unsecured). You may want the extra money for a variety of reasons, including home improvement projects and helping loved ones get on the property ladder.

A home equity loan could be added to your existing mortgage - or become your only form of secured borrowing if you're mortgage-free - to help you realise these ambitions. If you do have an existing mortgage, you'll either take on higher monthly payments or a longer term to repay the loan on top.

How you could access your home equity with equity release

If you're over the age of 55 and your property is worth at least £70,000, another option could be to release some of the equity in your home using a lifetime mortgage plan

A lifetime mortgage is a loan secured against your home and affects your financial options in the future, so it's important to research whether it's right for you and get financial advice before going ahead.

You can choose to make reduced or no monthly repayments to suit your circumstances, though making voluntary repayments will reduce how much interest is owed overall. As the loan, plus compound interest, is typically repaid through the sale of the property when the last remaining applicant passes away or moves into long-term care. The money you borrow is then paid back in full when you pass away or go into long-term care and your home is sold.

Our equity release calculator will let you know how much you could have available to release. It's important to check the benefits and drawbacks below before going ahead with your calculation.

Calculate now

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Benefits and drawbacks of equity release

It's important you have all the facts available to make the right decision for you.

Equity release benefits

Your specialist equity release adviser will explain:

  • You can unlock cash from your home, tax-free, to help meet your needs in later life.
  • You’ll always retain full ownership of your home and can stay in it for as long as you wish with a Key lifetime mortgage.
  • You can choose to make reduced or no monthly repayments to suit your circumstances.
  • You’ll never owe more than your home’s worth with a Key lifetime mortgage.
  • You may be able to remortgage your plan in the future to release further funds or secure a better interest rate, although this isn’t guaranteed and may be subject to early repayment charges.

Equity release drawbacks

Your equity release adviser will also outline the following:

  • A lifetime mortgage is a loan secured against your home and subject to compound interest, meaning the amount you owe can grow quickly.
  • Equity release will reduce the value of your estate and may affect your entitlement to means-tested benefits.
  • Equity release may leave you with limited or no property equity remaining.
  • Equity release will reduce your financial options in the future.
  • A lifetime mortgage is a long-term financial product and is not designed to be fully repaid until the death or entry into long-term care of the last remaining borrower, otherwise early repayment charges may apply.

Things to consider

  • All our equity release advice relates to Key lifetime mortgages only - a loan secured against your home
  • The loan, plus compound interest, is typically repaid through the sale of the property when the last remaining applicant passes away or moves into long-term care
  • Our fixed advice fee of £1,299 is only payable on completion

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What are the next steps?

Understanding equity and how much you have is useful information no matter your plan or stage in life.

If you've calculated the equity in your home and want to explore using some of it through equity release, you can book an appointment with one of our qualified equity release advisers at a time that suits you.

They'll explain the benefits, drawbacks and costs before going ahead, as well as your other finance options in later life.

Book now


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Page last updated: Monday 03 June 2024