In the lending market, your home’s equity is a precious commodity. So, what is ‘home equity’? It’s what you, as a homeowner, actually ‘own’, eg it’s the difference between what you owe on your mortgage and what your home is currently worth. If your home is valued at $800,000 and your loan is $350,000, the equity in your home is $450,000. This can provide for serious negotiation when applying for any new loans, or if you need to cash up by selling.

Your home equity can be increased by paying your mortgage down or a rise in the value of your home. Of course, the increased value of your home is often determined by the local property market, or if you improve your home without needing to extend your mortgage.

We’ve picked 3 great ways to improve the equity in your home:

Tip #1: Think Maintenance makes Money!

It may seem daunting to have to tackle that overgrown hedge or paint the back fence, but setting aside the time to get these things done will not only make you feel better about your home, it will improve its value. And, once it’s done, ongoing maintenance is so much easier.

Take a walk around your home with a clipboard, paper and pen, and make a list of all the areas that need repairs or maintenance. Put them in order from high to low priority, and if they need a qualified tradesman or for you and your family to set aside a weekend, just do it.

Also, what you’ll probably find is your neighbours will get into the act and maintain their homes, protecting all home values in the area. It’s a Win-Win!

Tip #2: Improvise Improvements

It’s all well and good to want to ‘keep up with the Joneses’ but make sure you don’t over-improve. Real estate ownership is generally a long-term investment so when considering improvements, look at trends that are consistent and never date, eg white painted walls.

Whilst it’s worth committing to improvements to raise the value of your home, ensure that you are consistent with similar homes in the local area. Removing wallpaper and carpet, and replacing with paint and new floor coverings, are usually the first things to consider. Updating a kitchen’s look can be as simple as changing cupboard handles and replacing the splash-back. Bathrooms might just require a new vanity and plumbing fixtures.

Improvisation is key so whatever you do, follow a strict budget, take on low-cost ideas, and only make improvements to your home as you can afford it. Extending your mortgage to cover major renovations will only decrease the amount of equity in your home.

Tip #3: Create an ‘Operation Downhill Mortgage’ Mindset

One of the best ways to increase your home equity is to decrease that mortgage as quickly as possible. Check with your mortgage broker or lender to see what type of loan you have, and the best way to pay your loan down quickly. Incremental steps by making more principal payments, even small ones, can create a ‘snowball rolling down the hill’ effect.

A great tip is to round up to the next $100 or $500 and make that higher payment part of the budget. Another tip is to try to live off one income, paying the mortgage off with the other income. These could be tough at first but once you get into the swing of it, you’ll be paying the mortgage off faster than you’ve ever believed possible.

Increasing your efforts to ensure the equity in your home is protected is one of the most honourable things you can do for yourselves, your children and your futures. Just by taking on these 3 tips will not only improve your home equity confidence but also begin to provide a substantial asset which can be used for negotiating investment and any other loans in the future.