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There are various ways to improve the equity in your home. Here they are:

(1) Improved Valuation

If the Appraiser gives you and improved valuation on your home over the last one, whether because of natural market forces or improvements made or a combination of both, chances are your equity has increased. Strictly speaking, this will hold true if you have not increased the loan balance on the property and assuming the bank will continue to at least extend the same loan to value ratio. The increased equity will be the the new amount the bank is prepared to finance based on the improved valuation less the existing loan balance.

(2) Improved Credit Status

Assuming the value on you home has not increased and that you have not already borrowed 100% of the value, you can improve the equity through improving your credit standing and having the bank reward you by agreeing to finance a higher percentage of the home's value. The increased equity will then be the difference between the new amount the bank is willing to finance and the existing loan balance on the property.

(3) The Bank Independently Agreeing To Lend A Higher Percentage of Home Value

Outside of an improved credit status, the bank may very well decide to change its own risk structure. If the bank agrees to lend more, it is increasing its risk exposure with the impact on your equity being the same as described in (3) above.

(4) Paying Down The Existing Loan

This is an obvious way to improve the equity in your home but some would argue impractical especially if your ultimate goal in the first place was to get additional cash. Notwithstanding, it is certainly one of the ways with the new equity in your home being the amount the bank is prepared to lend less the new paid down loan balance.

Learn more about this author, Adrian Keys.
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