Home Equity Calculator — what share of the house you own

Once a year, to see where you stand. Also before asking a bank for anything — equity is the first thing they look at.

1. Value minus outstanding loan is your equity. If it comes out negative it turns red — you owe more than the house is worth.
2. That equity divided by the value gives your share as a percentage.
3. The third figure shows what a bank might lend against it: 80% of the value, minus what you already owe. That is roughly where lenders in Pakistan stop.

• Using a hopeful value. Equity built on a guess is a guess.
• Using the original loan instead of the balance left.
• Treating equity as spendable money. It is only real when you sell or borrow against it — and borrowing against it brings back an instalment.

• It is not a valuation. For a real figure, the market report, the plot page and a dealer who knows that block are the honest sources.
• It does not include what selling would cost you — commission, tax and DHA dues come off the top.
• The 80% line is a rule of thumb; your bank's limit may be lower.

Why does equity grow so slowly at first?

Because in the early years almost all of your instalment is markup. The amortisation calculator shows this year by year — it is worth looking at once.

What raises equity?

Two things: the price going up, and the loan coming down. Paying extra does the second faster, and it is the only one of the two you control.