Understanding Mortgages and Home Equity | Alison

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Understanding Mortgages and Home Equity - Revised

Learn more about the financial concepts behind mortgages and home equity before purchasing a property.

Finances and Banking
Free Course
This free online mortgages and home equity course will discuss the crucial relationship between mortgages and home equity. Your mortgage payments pay off your debt to the bank, while your home equity is how much of your home you actually own. With this course, you will learn how home equity is calculated by taking the appraised value of your home and subtracting the balance remaining on your mortgage. Get started, today.
  • Duration

    1.5-3 Hours
  • Assessment

  • Certification

  • Responsive

  • Publisher

    Khan Academy





View course modules


Acquiring a property through a mortgage from the bank entails a lot of considerations, so understanding the relevant calculations at hand can be a big help. This course will first introduce you to the concepts of assets, liabilities, equity, and collateral in relation to obtaining a mortgage from various financial institutions. It will then teach you how to make a balance sheet and compute your equity depending on the market value of your property.

If you decide to sell your property or are incapable of continuing to pay your mortgage loan from the bank for whatever reason, you will then need to learn how to calculate the interests that come with your decision. This course will discuss how to calculate monthly interest rate repayments over the lifetime of a fixed rate mortgage using a geometric formula.

Owning a house is a major aspiration for a lot of people. In the vast majority of cases, fulfilling this dream requires taking out a mortgage, which is one of the biggest financial commitments most people make in their lives. This course will ensure that you learn the crucial financial concepts behind getting a mortgage before you dive in. These are really valuable pieces of knowledge, so don't wait until it's too late. Get started with your next learning journey, today.

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Learning Outcomes

Having completed this course the learner will be able to:

  • Describe the meaning of assets, liabilities and equity in relation to purchasing a house.
  • Calculate monthly interest rate repayments over the life-time of a fixed-rate mortgage.
  • Calculate monthly interest payments using a geometric formula.


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