A home you live in occupies a strange dual position on your balance sheet: it's genuinely an asset, often your largest one, and at the same time, via its loan, it's also a liability. Understanding both sides at once avoids a common confusion about what your home actually means for your finances.
Here's how the duality works. The home's market value counts as an asset — say it's worth ₹80 lakh. The outstanding loan against it, say ₹50 lakh, counts as a liability. Your actual equity in the home — what you'd walk away with if you sold and repaid the loan — is the difference, ₹30 lakh. As you pay down the loan's principal each month, that equity slice grows, and your net worth rises along with it, even if the home's market value hasn't changed at all.
Why this matters for how you think about your wealth: a home is genuinely valuable to hold, but it isn't liquid — you can't spend a portion of it tomorrow the way you could with money sitting in a savings account. Someone whose net worth is almost entirely tied up in their home's equity can be "wealthy" on paper while having very little accessible cash for an actual emergency, which is an important distinction to keep in mind.
The practical takeaway: count your home's equity in your net worth, by all means — it's real and it matters. Just don't treat it as equivalent to liquid savings when thinking about your near-term financial flexibility; it's valuable, but it's a different kind of valuable.