Home equity is what your house is worth minus what you still owe on your mortgage. That's the entire formula. The difficulty isn't the subtraction but the two figures: which property value do you use, and what exactly is your outstanding balance when your mortgage consists of several parts?
And there's a third question almost nobody asks, though it tells you the most: how much of your equity did you build yourself, and how much did the market hand you?
What is home equity exactly?
Home equity is the share of your house that belongs to you rather than the bank. Sell today, repay the mortgage, and the equity is what's left over.
Equity = market value − outstanding mortgage
If your mortgage exceeds what the house is worth, you have negative equity: a residual debt that survives the sale. This was widespread after 2008 and has become rare through recent price rises, but it still occurs on recently purchased homes.
One thing to be clear about: equity isn't money in an account. It's wealth locked in brick. You can't spend it without selling, increasing your mortgage, or refinancing.
How do you calculate your equity?
Step 1: what is your house worth?
You need market value, not the purchase price and not the municipal valuation. Three ways to get there, from rough to precise:
An online estimate. Free, instant, based on sale prices of comparable homes nearby. Fine as an indication, useless towards a lender.
Applying the price index. Take your last valuation or purchase price and move it with price development for homes in your region. Statistics Netherlands and the Land Registry publish these quarterly by area. This beats a national average, because prices in Groningen move differently from those in Utrecht.
A valuation report. Costs a few hundred euros and is the only thing a bank accepts. Necessary if you want to increase your mortgage or have your rate adjusted.
Step 2: what do you still owe?
This is where most home-made calculations go wrong. Many Dutch mortgages consist of several loan parts, and they don't repay identically.
- Annuity: your monthly payment stays level, but the repayment portion grows every year. Early on you're mostly paying interest.
- Linear: you repay the same amount every month. Your monthly payment falls steadily.
- Interest-only: you repay nothing. After thirty years the full amount is still outstanding.
If you have an annuity part and an interest-only part, you can't treat them as one loan. They move differently, usually carry different rates, and have different dates on which the fixed-rate period ends.
Your current balance appears on your lender's annual statement, listed per loan part.
Step 3: the difference
Market value minus the combined balance of all parts. That's your equity.
Municipal valuation or market value?
This is the most common error, and it always works in the same direction.
The municipal valuation (WOZ) is an assessment by your local council with a reference date of 1 January of the preceding year. The notice landing on your doormat in February 2026 refers to the value on 1 January 2025: a figure more than a year old.
In a rising market your municipal valuation therefore sits structurally below actual market value, and you understate your equity. In a falling market the reverse happens.
Use the municipal valuation for what it's meant for, local taxes, and not for calculating your wealth. One exception: some lenders accept a municipal valuation as supporting evidence for a rate-reduction request. Worth asking, because it saves you the cost of a valuation.
A worked example
A house bought in 2019 for €350,000. €10,000 of own money went into the property itself, so the mortgage came to €340,000, split across two parts:
| Loan part | Amount | Type | Rate |
|---|---|---|---|
| Part A | €240,000 | Annuity, 30 years | 2.0% |
| Part B | €100,000 | Interest-only | 2.3% |
Seven years later, in 2026, the house is worth €480,000. Where do things stand?
Part A is an annuity, so repayment has happened. After 84 monthly payments, €196,121 remains outstanding: €43,879 has been repaid.
Part B is interest-only. Still €100,000.
| Amount | |
|---|---|
| Property value | €480,000 |
| Part A outstanding | −€196,121 |
| Part B outstanding | −€100,000 |
| Equity | €183,879 |
Just over €183,000. And now the question that makes it interesting.
Where does your equity actually come from?
That same €183,879 breaks into three sources, and they tell a very different story from the total:
| Source | Amount | Share |
|---|---|---|
| Property appreciation | €130,000 | 71% |
| Repayment on part A | €43,879 | 24% |
| Own money at purchase | €10,000 | 5% |
Nearly three quarters of your equity came not from repaying but from the market rising. Seven years of faithfully paying your mortgage produced €43,879. The housing market produced €130,000.
Why this matters: those two sources behave completely differently. Repayment is irreversible and steady: a little more every month, regardless of what the market does. Appreciation can reverse tomorrow. Anyone basing financial plans on equity that's 71% market movement is basing them on something that can evaporate.
A second reason to keep them apart: only the repayment portion is genuine saving. It's money you freed up from your income. Appreciation was given to you, not earned, and you only get your hands on it by selling or refinancing.
What is loan-to-value, and why might your rate fall?
Loan-to-value (LTV) is your outstanding balance divided by your property value, as a percentage. It's the mirror of your equity: the lower your LTV, the higher your equity.
In the example above:
- At purchase in 2019: €340,000 / €350,000 = 97.1%
- Now in 2026: €296,121 / €480,000 = 61.7%
This figure is more than a statistic. Lenders sort mortgages into risk bands based on LTV, and each band carries an interest surcharge. Lower LTV, lower risk to the bank, lower surcharge.
The thresholds vary by lender, but they typically sit around 90%, 80%, 67% and 60% of property value. Drop below one and you can request reclassification into a lower band: reducing your monthly payment without changing anything else.
There's a concrete action point here. Our example sits at 61.7%. Repaying another €10,000 brings it to 59.6%, just under the 60% threshold. Whether that's worthwhile depends on your lender's surcharge, but it's worth the arithmetic: especially since the same threshold can be crossed by a rising property value, without repaying a cent.
Plenty of people cross a threshold without noticing, and lenders don't always adjust it on their own initiative. With a government-guaranteed mortgage this doesn't apply: one rate regardless of LTV.
Why one mortgage figure isn't enough
If you track your mortgage as a single number, you're missing four things that all cost money.
You don't know when fixed-rate periods end. Parts often have different end dates. If one expires during a period of higher rates, your monthly payment rises at a moment you didn't see coming.
You can't calculate your penalty-free allowance. Most lenders let you repay a percentage of the original principal each year without penalty, usually 10%. That percentage applies per loan part. To repay extra without penalty, you need to know how much room each part has.
You don't know which part to repay first. Repaying extra on your interest-only part at 2.3% does something different to your LTV and your monthly payment than repaying on your annuity part at 2.0%.
Your repayment schedule is wrong. A construction-deposit drawdown, a rate change or an extra repayment alters the whole schedule from that point on. Work from the original table and your calculation drifts further out every year.
What can you do with your equity?
Releasing it through your mortgage
You can increase your mortgage up to a share of the property value and take the difference in cash. This requires a valuation, and the bank reassesses your income.
Where the money goes determines the terms. If it goes into the property itself, renovation, energy efficiency, different rules apply than if you spend it freely. That difference is large enough to investigate beforehand.
For homeowners above a certain age there are also products that release equity without monthly payments, where interest is added to the debt. These are more complicated than they sound and deserve separate advice.
Selling and reinvestment rules
If you sell and buy again, one rule governs what you must do with your equity: the Dutch reinvestment rule.
In short, the tax authority expects you to put your equity into the next property. Don't, and borrow more instead, and you lose mortgage interest relief on that additional portion. You may keep the money, but it costs you the relief on the amount you could have contributed.
This is one of the few places where your equity directly affects your monthly payments in your next home. Work it through before deciding, or have it worked through.
Does equity count towards your net worth?
Yes, and for most Dutch households it's the largest item on the balance sheet. But there are two reasons to keep viewing it separately from savings and investments.
It isn't liquid. You can't buy groceries with it. Accessing it means a valuation, an application, and sometimes months.
The value is an estimate. Your bank balance is a fact. Your property value is an assessment that only becomes real at the moment of sale, and by then it can be tens of thousands out.
Anyone tracking their wealth is better off keeping equity visible as its own category rather than adding it to the liquid portion. For a FIRE calculation that holds doubly: a house you live in produces no income, so it counts differently from a portfolio of the same size.
Where does tracking it by hand break down?
For a single point in time this is a perfectly good spreadsheet job. The problem is that everything keeps moving.
Your balance changes every month, per loan part, on a different schedule. Your property value moves with the market, and you update it whenever you remember. Make an extra repayment and the whole schedule needs redoing from that point. A fixed-rate period expiring, same thing.
Most homeowners therefore calculate their equity once, when arranging the mortgage or during a renovation, and don't look at it again for years. Those are precisely the years in which they cross LTV thresholds without noticing.
How Gylder calculates this
Gylder models a Dutch mortgage the way it's actually built: multiple loan parts, each with its own repayment type, rate, term, fixed-rate end date, penalty-free allowance and deductibility.
Property value moves between your own valuations using the official house-price index for your region, so your equity stays right in the years you enter nothing.
The property page shows side by side: your net equity, your LTV with a signal when you approach a threshold, the full repayment schedule split into interest and principal, and your deductible interest. Extra repayments, rate changes and construction-deposit drawdowns are logged as events, after which the schedule recomputes itself.
And the split from this article, how much of your equity came from repaying and how much from appreciation, sits there as its own line, so you never conflate the two.
What this doesn't tell you
Your equity is a snapshot based on an estimated value. Two things stay outside it.
The cost of selling. Estate agent fees, any early-repayment penalty and moving costs come off your equity at the moment you realise it. Expect a few percent of the sale price.
The uncertainty in the value. A price index says something about averages in your region, not about your house with your deferred maintenance or your extension. There's room between an indexed estimate and a real valuation, and that room grows the longer ago your last valuation was.
What it does do: it keeps the figure current and the composition visible, so you know when a valuation becomes worth paying for.
Frequently asked questions
Is equity the same as my stake in the house? Yes, two words for the same thing: property value minus outstanding mortgage.
Can I access my equity without selling? Yes, by increasing your mortgage. That involves a valuation and a fresh income assessment, and the terms depend on what the money is for.
Why is my municipal valuation lower than what my house is worth? Because the reference date is 1 January of the preceding year. In a rising market it always lags.
What's a good LTV? Lower is better for your rate. The thresholds where it matters sit around 90%, 80%, 67% and 60% at most lenders. With a government-guaranteed mortgage, LTV makes no difference to the rate.
Does equity count towards my FIRE number? Only if you intend to realise it. Keep living in the house and the equity produces no income, so you can't fund your spending from it. What does help is that a repaid mortgage lowers your monthly costs, and that genuinely lowers your FIRE number.