Home equity is the market value of the property you own minus the loan balance on the property. If you want a higher equity value on your property, you need to reduce the loan balance on the property on the one hand and increase the market value of the property on the other hand. There are some specific methods and techniques to reduce the loan balance and to increase the market value of the real estate, in addition to the heat of the real estate market, it also depends on the quality of the real estate.
Mortgage Repayment Tips
If the property you own was purchased with a mortgage loan, the mortgage portion is a liability. The higher the mortgage-to-value ratio, the more debt, and the lower the equity in the property. Assuming that the market value of the property you own is 2 million yuan, and the mortgage loan in the bank is 70%, that is, the loan balance of 1.4 million yuan, then the net asset value of the property is 600,000 yuan.
So to increase its equity, you need to repay the mortgage as soon as possible, which also saves you the interest you need to pay. The methods of repaying the mortgage include: one-time settlement, the monthly payment remains unchanged, the repayment period is reduced, the monthly payment is reduced to maintain the repayment period, the monthly payment period is doubled, and the monthly payment is increased to shorten the repayment period. Each of these five methods has its characteristics:
- One-time settlement: It means that all the loan principal is paid off, and no interest will be generated after the settlement. Under the same conditions, this method saves the most interest, but it has higher economic requirements for the repayer.
- The monthly payment remains unchanged and the repayment period is reduced: You need to repay part of the loan principal in advance. By keeping the monthly payment unchanged, you can reduce the repayment period, speed up the repayment, and save the interest to be repaid. It is more suitable for increasing income but cannot be repaid at one time. Mortgage clearing person.
- Reduce the monthly payment to maintain the repayment period: You need to repay part of the loan principal in advance. If your income has dropped for some time, but you have a certain amount of savings, you can repay part of the principal to reduce the pressure of monthly repayment.
- Double reduction of the monthly repayment period: This method requires part of the loan principal to be repaid in advance, which is suitable for people with a declining income to repay the mortgage.
- Increase the monthly payment and shorten the repayment period: This method can speed up the repayment speed and reduce the interest paid. It is suitable for people who have increased their income after buying a house and hope to pay off their property loan as soon as possible.
Factors that affect the market value of the real estate
The quality of real estate is directly related to its market value. The factors affecting the quality of real estate are mainly divided into three items: the property rights status of the real estate, the area where the real estate is located, and the physical object of the real estate. The area where the real estate is located will comprehensively consider its location, surrounding environment and landscape, and external supporting facilities. The relevant factors are explained in detail below:
- Property rights status of real estate: refers to the nature of property rights of real estate. As domestic real estate is affected by different stages and orientations of housing policies, there are many types of property rights, including commercial housing, housing reformed housing, affordable housing, low-rent housing, fund-raising housing, and small property rights housing. There are differences in the ownership of these houses, which also lead to differences in the value of the properties.
- Location: including the city, orientation, distance, orientation, and floor where the property is located.
- Surrounding environment and landscape: The surrounding environment and landscape that have an impact on the property value mainly include atmospheric environment, hydrological environment, acoustic environment, sanitary environment, and humanistic environment.
- External supporting facilities: For the completed real estate, especially the residence, the completeness of the external public service infrastructure is also particularly important, including the surrounding primary and secondary schools with high education quality, hospitals with high medical levels, shopping centers, leisure and entertainment places, parks and other facilities.
- Land factors: including the development area, land shape, topography, soil, foundation, and degree of land development of the community where the property is located.
- The factors of the real estate itself: include building scale, appearance, building structure, facilities and equipment, story height, indoor clear height, space layout, waterproof and heat insulation, ventilation, lighting, sunshine, interior decoration status, maintenance status, etc.
Mortgage value of the real estate
The property can be used for mortgage refinancing, and the value of the property determines the amount of financing with the property. When each property is to be mortgaged, the bank or lending institution will evaluate its value, and the assessed value of the property directly affects the amount of the loan with this house as the collateral. The maximum amount of domestic real estate mortgage loans does not exceed 70% of the value of the mortgaged real estate.
