The “equity” in your home or investment property, is the difference between what it’s currently worth, and the amount you still owe the bank. Let’s say your home is now worth $500,000 and you owe the bank $300,000 – the equity you have is $200,000.
“Equity” is often used when people are talking about using the equity in their current property to renovate, invest, or even fund the deposit for another property. Banks will typically lend you this equity amount – so you could get another loan for $200,000 in the example above.
While this can be an effective strategy, it can also be risky – so should be considered carefully, depending on your specific situation and goals.