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A
B
C
D
E
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Letter E
Equity
The stake in your home that belongs to you over and above what is outstanding to
the mortgage company.
As the property value rises and falls so does the value of your equity. As such
if the property falls below the value of your mortgage you will be in negative
equity.
If the property rises considerably you are able to release equity by either
re-mortgaging, using a drawdown facility, if you have one, or taking a further
advance.
Other than inflation your equity can also increase if you carry out home
improvements to your property such as an extension or conservatory. However your
equity does not normally increase in line with the cost of the improvement, so
as a rule of thumb improvements should be for your benefit rather than how much
they will improve the value of the house this can be in some cases false
economy.
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