Assets = Liability + Equity
Which can also be written as:
Equity = Assets – Liability
So, supposing that your home is valued at $500,000 and you borrowed $450,000 and have already paid off $50,000 then (excluding any other asset you own), your actual equity would be:
Value of Home = $500,000
Total Liability = $400,000
Total Equity = $100,000
Now what you actually need to understand in the above scenario is that in financial terms there is no real difference when assessing net wealth between that money being invested in your home or being cash in your pocket.
Where it gets amazing is when you do some kind of renovation that adds considerably to the value of your home. Consider that you decide to drawn down $10,000 of the equity that you already have in order to renovate your bathroom(and any reputable bank would let you do this).
Depending on the choices you make in the design process and how well the work is carried out, the renovation could add $50,000 (or even more) to the value of your home.
So your equity picture would be more like:
Value of Home = $550,000
Total Liability = $410,000
Equity = $140,000
So just like that, with hardly any effort at all, you would have actually increased your net wealth by 40%. This is why so many people are caught up in the renovation boom at the moment, and frankly if you don’t join them then you’re missing out.
Malvern is a key growth suburb that is likely to provide property investors with excellent returns over the longer term. Bathroom renovations in Malvern should be a top priority for any resident.
Fortunately these days it is really easy to find bathroom renovations designers in Malvern who can help you with the project – no need to tie yourself down with extra work and problems. Putting your trust in a professional team will ensure you get the best results in the fastest time at the lowest cost.
1035 Burke Road
Hawthorn East (cnr Canterbury Rd)
Monday to Friday: 10am – 5pm
Saturday: 10am – 4pm
Or by appointment
Phone: 03 9882 4103
Fax: 03 9882 4763