How to leverage your home equity for financial success in 2025

With a new year just around the corner, now is the perfect time to take stock of your financial health and set some goals for 2025. 

For many homeowners, one of the biggest financial assets is the equity that have built in their home.

Whether you're looking to reduce mortgage stress, plan a renovation, or kickstart a new business, understanding your home equity situation can open up a wide range of possibilities.

Find out how to calculate how much equity you've built up and how you can make it work for you.

What is home equity?

Put simply, home equity is the difference between the current value of your home and what you still owe on your mortgage. 

It represents the part of your property that you truly own. Over time, as you make mortgage repayments and your home's value increases, the amount of equity in your home grows.

Think of home equity as a financial resource, similar to a savings account or an investment. Home equity builds over time as you pay down your mortgage and your property's value increases, and it can sometimes be leveraged without taking on new debt.

Your home's current market value can be worked out with a professional appraisal, while your mortgage balance will be available from your bank. 

How to calculate your home equity

Calculating your home equity is easier than it sounds. 

The current market value of your home 
minus
Your remaining mortgage balance
equals
Your home equity

For example, if your home is worth $800,000 in today's market and you still owe $400,000 on your mortgage, your equity is $400,000. 

Remember that the value of your home is not static — it changes based on market conditions. Tools like LongView’s home equity calculator can help you work out your current equity position and how much equity you may be able to unlock.

Understanding exactly how much equity you have is a good first step to making informed decisions about your finances, especially if you want to use that equity to achieve some of your upcoming goals.

How to make your home equity work for you in 2025

Once you have a clear understanding of your home equity, you can start thinking about how to put it to work. 

Australian homeowners are increasingly house-rich and cash-poor, often with hundreds of thousands of dollars tied up in their properties while struggling to handle day-to-day expenses or save the necessary cash to make their next steps.

If you've been in your home for at least a few years, you may have built up enough equity to take advantage of a shared equity agreement, or SEA. 

Shared equity involves a third-party partner like LongView paying the homeowner a lump sum of cash in return for a share of future property growth. This can open the door to a range of opportunities in the year ahead, like the following. 

• Reducing mortgage stress
  A substantial cash injection from using a shared equity solution can translate to making a meaningful dent in the size of your mortgage, making your future mortgage payments easier to cover without incurring any additional debt. 
• Funding a major renovation
  When looking to upgrade your current home to better suit your growing family's needs, accessing equity to fund a renovation can be an effective way to cover the costs without years of saving. 
• Investing in business
  Launching or growing your own business can be a financially demanding undertaking. Making your home equity work for you can be an effective way of making your professional aspirations a reality without taking on the risk of extra debt.

As you start planning for the new year, consider taking a closer look at your home equity. It might just be the key to achieving your financial goals in 2025.

Understanding and leveraging your home equity can put you in a stronger position for the future. Make this the year when your home truly works for you.

Those who are in a position to refinance or opt for a Shared Equity solution should make sure to seek professional advice to understand which is the right path for their personal circumstances.