GLOSSARY

Canadian Financial, Real Estate and Mortgage Glossary

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Equity


Synonyms:assets, backing, close corporation, closely held, common interest, holding, ownership, privately held, share, stake, stock
Filed Under: financial-banking, insurance, investments, legal-contracts, mortgages
Tags: banking, contract, insurance, investment, legal, mortgage
 

Definition of equity

equity
1. The value of a property minus outstanding mortgage debt and other liens. Equity is the portion of your property that you have already paid for plus the appreciation, if any, in the value of the property since it was purchased.
2. A claim or interest in a business or asset that represents ownership. Some equity is traded as a security through shares on a stock exchange, while some equity is privately traded between two parties. For example, the shareholders of a corporation have equity in, and by extension partial ownership of, the corporation. Likewise, venture capitalists provide funds to startup companies in exchange for equity in the business.

Related Terms and Acronyms:

  • asset-backed securities (ABS)   Securities backed by a pool of assets.
      ➥  Financial security made up of a bundle of assets.
  • home equity (HE)   The part of a home's value that the mortgage borrower owns outright; the difference between the fair market value of the home and the principal balances of all mortgage loans.
  • home equity line of credit (HELOC)   An open-ended loan, paid as revolving debt, that is backed by the equity in the property.
      ➥  Also known as a Home Line of Credit.
  • home equity loan (HEL)   A loan that can replace or be an addition to the first mortgage. Typically used as a home improvement loan.
      ➥  Also known as an Equity Take Out (ETO).
  • mortgage-backed securities   Securities backed by mortgage debt.
  • return on equity (ROE)   A ratio that shows how profitable a company is when compared to shareholder equity.
  • securities/investment dealer   One who acts as the agent for another party to buy and sell securities and other investments; also an underwriter.
  • security   A tradable financial implement that represents ownership, the rights to ownership or debt.
  • seed funding   Money used to start a business.
  • share certificate   A certificate of deposit issued by a credit union that pays a specific dividend if held for a specific period. It's the credit union equivalent of a certificate of deposit. A penalty is usually assessed if all or any of the principal is withdrawn before maturity.

More Related Terms and Acronyms

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