The difference between your property's current market value and the outstanding mortgage balance.
Equity builds over time as you pay down your mortgage principal and as property values increase. You can access your equity through refinancing, a HELOC, or a second mortgage. Maximum total lending against a property is typically 80% of its value (conventional) or 75% (private). Equity is important for qualifying for refinancing, for accessing funds for renovation or investment, and as a measure of your net worth in real estate.
Related terms: Loan-to-Value (LTV) Ratio | Home Equity Line of Credit (HELOC) | Mortgage Refinancing