Equity
Equity is simply a financial term for how much of something you own, which can be expressed as a percentage or a cash amount. If you own half of a property worth £250,000 you could say you have 50% or £125,000 equity in it interchangably. Similarly, if you have paid half of your mortgage on that property, then exactly the same terms apply.
In lending circles, the amount of equity you have in something can be used as security to take out a home equity loan. In the above example a typical individual with a decent credit rating could take out a loan of around £110,000 against their equity of £125,000, the difference being due to the loan-to-value rate they lender is prepared to offer them. Individuals with a spotless credit rating can take out a loan against their equity with a loan-to-value ratio of 125%, or close to £160,000.
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