Financing
Equity
Property value minus outstanding mortgage
Full Definition
Equity is the difference between a property's market value and any outstanding mortgage. As property values rise and mortgages are paid down, equity increases. Investors can release equity through remortgaging to fund further purchases. Equity represents your actual ownership stake in the property.
Related Terms
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Analyse a PropertyMore Financing Terms
LTV (Loan to Value)
Mortgage amount as percentage of property value
ICR (Interest Coverage Ratio)
Rental income compared to mortgage interest payments
Bridging Loan
Short-term finance for quick purchases or refurbishment
Remortgage
Replacing existing mortgage with new one
Leverage
Using borrowed money to amplify returns
Portfolio Landlord
Landlord with 4+ mortgaged properties