What is equity in a home?

When you come to sell your property you would hope to make some profit from the sale. In most cases homeowners rely on the this profit to give them the money for a deposit for the next home or to retire on or maybe invest. Whatever you intend the money for we call this equity. Its the gap between what the property is worth as selling price and what you have left owing on the mortgage. Any house move requires Solicitors help and some Ascot solicitors could come in very handy. Ascot solicitors Parachute Law would be a good example.

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As an example if you have a mortgage of £100,000 the property is valued at £250,000 you could hope to walk away with £150,000. Costs would have to be subtracted from this but in general you can use this as a start point for the when you begin a mortgage application. As long as you have equity inthe property your situation is agreeable.

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What happens if the property’s value is less than the mortgage you currently have? You still have equity of sorts, but it is now negative equity. In a reverse of the last example, if the home’s value drops below the selling price, you will not have anything to use as a deposit. This means having to repay the excess to the lender. However, many lenders try and help where they can.

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