equity of redemption

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The full bundle of a mortgagor's rights in the mortgaged property, subject to the rights of the mortgagee. The equity of redemption is more commonly referred to simply as the “equity” and is generally equivalent to the value of the property less the outstanding debt secured against it. For example, a property worth £500,000 subject to an outstanding mortgage of £250,000 will have equity to the value of £250,000. This equity can support further borrowing (subject to issues of priority) and can be gifted by will.

Subjects: Law.

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