Home equity is the portion of your property’s value that you actually own. It is calculated as the difference between the current market value of the house, less your remaining mortgage payments. Home equity increases when the property value increases or as the loan balance is paid off.
Mortgage express advises that once you have enough equity, you can make that “equity work for you in a number of ways, including “refinancing your mortgage with better terms so you can pay off your mortgage quicker, renovating to increase your property’s value, or buying an investment property to generate wealth through rental income.” (From Mortgage express – Making your home equity work for you. Mar 24, 2017)