Equity in property
In the context of residential property it is a measure of the difference between the market value of a property minus what the owner still has to pay on the mortgage. There are many variables but generally over a specified period (often twenty five years) the equity in the property is gradually transferred from the lender to the owner.
Market value can fall in the early stages after purchase. In extreme cases this can result in the owner having negative equity and the lender foreclosing the mortgage arrangements and repossessing the property. The lender can then sell the property to recover the loan and retain the owner’s deposit if there is a shortfall.
Equity in property development investment is similar, following the notion of redemption when the share is valued as the difference between the market price of the property and the amount of any mortgage or other encumbrances. If the asset value of the entity exceeds all its liabilities, including initial equity capital, there will be a capital gain for the investors.
 Related articles on Designing Buildings Wiki
Featured articles and news
Why buildings crack, how cracks are categorised and what can be done.
Inaugurated last week, the new Elbphilharmonie concert venue; a soaring new addition to Hamburg's skyline.
Summary of a new ICE Transport journal which says improving transport infrastructure is essential to eradicating global poverty.
BRE look at a new government report into the accuracy of heat meters.
Herzog & de Meuron get planning permission for revamp of Chelsea FC football stadium.
UK-GBC green paper proposes more powers for cities on new-build housing.
The Pompidou Centre – not a monument but an event.
The Chartered Institute of Building restructures and launches 29 new local hubs.
Designing Buildings Wiki talks to the founder of the world's first indoor biophilic gym, now open in London.
£1.3bn Swansea Bay project to be backed as a 'pathfinder' for other tidal lagoon projects.
Designs released for a proposed Las Vegas stadium to entice the Oakland Raiders.
Have a look at these award-winning concept designs for a thermal bath in Latvia.