What home equity is
Your equity is the part of your home you own outright: its current value minus what you still owe on your mortgage. A £300,000 home with a £200,000 mortgage has £100,000 of equity.
You can borrow against that equity with a further advance from your mortgage lender, a remortgage, or a separate loan secured on your home (a second charge). Lenders usually cap the total borrowing at a percentage of the home's value.
Worked example
Borrowing £40,000 against your equity at 7.5% over 10 years costs £474.81 a month. You'd repay £56,976.85 in total, including £16,976.85 of interest.
Interest is worked out monthly at one twelfth of the annual rate. Lenders may calculate interest differently (some charge it daily), so your actual payments can differ slightly.
Before you borrow against your home
Your home may be repossessed if you don't keep up repayments on a loan secured on it.
Compare the total cost with other options. A longer term lowers the monthly payment but increases the interest you pay overall.
Inputs for the equity calculator
Amount to borrow
How much you want to borrow against your home's equity.
Interest rate (per year)
The annual interest rate on your loan. The rate shown is only an example, so enter the rate from your quote.
Term
How many years you'll repay over.
CALCULATOR QUESTIONS
Home equity loan calculator questions
How do I work out my home equity?
Take your home's current value and subtract the mortgage balance. For example, £300,000 minus £200,000 leaves £100,000 of equity.
How much equity can I borrow?
It depends on the lender. They usually limit total borrowing, including your mortgage, to a percentage of the home's value, and check that you can afford the repayments.
Is borrowing against equity the same as a second mortgage?
A separate loan secured on your home is often called a second mortgage or second charge. You can also borrow through a further advance or a remortgage.
What's the risk?
Your home may be repossessed if you don't keep up repayments on a loan secured on it.