Home Equity Calculator
Find out how much equity you have built up in your home — and how much you could release or use as a deposit to move.
Reviewed by Richard Ross · Last updated April 2026
How Home Equity Calculator works
What is home equity?
Equity = Property Value − Outstanding Mortgage. It represents your ownership stake in the property. As you repay your mortgage and/or the property value rises, your equity grows.
How to use equity
Equity can be accessed through remortgaging (release equity as cash), further advance from your existing lender, or a second charge mortgage. It can be used as a deposit on a second property, home improvements, or other large expenditure.
Equity release for older borrowers
Equity release products (lifetime mortgages, home reversion plans) allow homeowners aged 55+ to access equity without monthly repayments. Interest rolls up and is repaid on death or care home entry. These are regulated products — always seek independent financial advice.
Capital gains on your main home
Any profit on the sale of your main residence is typically exempt from Capital Gains Tax under Private Residence Relief. CGT may apply to portions of the gain relating to periods of non-occupation or buy-to-let use. Your home is also part of your estate for inheritance tax purposes — equity release reduces the taxable estate.
Calculate your capital gains tax liability →Inheritance tax calculator →Equity and further advances
A further advance is an additional loan from your existing mortgage lender, secured against the equity in your property. It is separate from your main mortgage and may carry a different interest rate. Further advances are popular for home improvements, extensions, or loft conversions. Most lenders require at least 15–20% equity (80–85% LTV) before offering a further advance, and will reassess your income and credit file. The new combined loan must meet their standard affordability criteria.
How rising property values build equity
UK house prices have risen an average of approximately 5% per year over the past 25 years, though this varies significantly by region and period. On a £300,000 property, 5% annual growth adds £15,000 in equity in year one alone — more than many borrowers repay in capital. This "forced savings" effect is one of the most cited arguments for home ownership over renting. However, values can also fall, as seen in 2022–23 when average prices declined 3–5% from their post-pandemic peak.
Source: HM Land Registry — UK House Price Index, GOV.UK (gov.uk/government/collections/uk-house-price-index-reports). HMRC — Capital Gains Tax on property (gov.uk/capital-gains-tax/rates).
Further reading
Planning a remortgage? Understanding how your LTV ratio affects your rate tier is the first step to getting the best deal.
Remortgage LTV: how your loan-to-value ratio affects your next deal →Frequently asked questions
How do I calculate my home equity?
Equity = Current Property Value − Outstanding Mortgage Balance. Example: a £350,000 home with a £200,000 mortgage has £150,000 equity (42.9%).
How can I increase my home equity?
Make mortgage overpayments (reduces balance), wait for property value to rise, or add value through improvements. Avoid equity release unless necessary, as it compounds interest.
Can I access my equity without selling?
Yes. Options include remortgaging to a higher loan (releasing equity as cash), a further advance from your lender, or a second charge loan. Each has different rates and eligibility requirements.
How much equity do I need to remortgage?
Most lenders require at least 5% equity (95% LTV) to remortgage. The best remortgage deals are available at 60–75% LTV. If you have under 20% equity (above 80% LTV), your options are more limited and rates higher.
Is releasing equity from my home taxable?
No — releasing equity via remortgaging or a further advance is not a taxable event. You are borrowing against your property, not realising a gain. Capital Gains Tax only applies when you sell. If the property is your main residence, the gain on sale is usually exempt under Private Residence Relief. CGT applies to let portions or second properties.
What is a second charge mortgage?
A second charge mortgage (also called a secured loan) sits behind your main mortgage on the property title. It allows you to borrow against equity without disturbing your existing mortgage, which is useful if you are on a favourable fixed rate with high early repayment charges. Rates are typically higher than first charge remortgages, and the total lending is capped at around 85–90% combined LTV.
Can I borrow against my home equity without remortgaging?
Yes. A second charge mortgage (also called a secured loan or homeowner loan) lets you borrow against equity without touching your existing mortgage. This can be useful if your current mortgage has high early repayment charges or a very competitive rate you don't want to lose. Second charges usually have higher rates than first charge mortgages. Alternatively, a further advance from your existing lender borrows more on the same mortgage.
How does releasing equity affect my estate?
Equity release (lifetime mortgages) allows homeowners aged 55+ to borrow against their property's value, with the loan and interest repaid from the sale of the property when they die or move into care. The amount owed grows significantly over time due to compound interest. This directly reduces the inheritance left to beneficiaries. The Equity Release Council's no-negative-equity guarantee means you can never owe more than the property is worth, regardless of market movements.
What is the equity in my home vs the LTV?
Equity and LTV are two ways of expressing the same thing. Equity is the cash value you own outright (property value minus mortgage). LTV is the proportion still owed. If your home is worth £300,000 and your mortgage is £180,000: equity = £120,000 (40%); LTV = 60%. They always add up to 100%. Rising property values increase equity without any mortgage repayment — a key driver of wealth accumulation through homeownership.
How long does it take to build significant equity in a property?
On a repayment mortgage, equity builds slowly at first (most payments are interest) and accelerates later. On a £200,000 mortgage at 4.5% over 25 years: after 5 years you have repaid approximately £19,000 of capital. After 10 years, approximately £43,000. After 15 years, approximately £76,000. Property price appreciation adds to this independently. Overpayments in the early years have an outsized impact because they reduce the interest calculation base for the remaining term.
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Your home may be repossessed if you do not keep up repayments on your mortgage.
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