The proportion of home owners who have achieved outright ownership, by accumulating total equity in the family home, also increases with age. It is accumulated through the deposit placed at the time of purchase, through paying off the mortgage principle, and through capital gains and losses as the market value of the dwelling rises and falls over time. The equity is measured as the value of the dwelling, as estimated by the householders themselves, less the reported value of any outstanding loans secured against the dwelling. For some buyers, high interest payments, combined with falling dwelling values in some periods and some locations, as well as any additional borrowings they have made, may even result in negative equity some years after purchase. Along with levels of outright home ownership, the amount of equity held in the family home follows a life-cycle pattern.
People accumulate a larger financial stake in their homes as they grow older.
On average, young home owners have a smaller equity in their home than older home owners. This is because they may not have made enough mortgage repayments since purchasing their home to significantly reduce their loan principle. However, even for young home owners, the equity in their homes is high. Elderly people were, on average, in smaller and lower-value dwellings. Larger households generally lived in more expensive homes and also had a higher level of equity in their home, reflecting a need for larger living areas.