GLOSSARY

Canadian Financial, Real Estate and Mortgage Glossary

How often this word is used
 
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50% - Moderately

Trade Equity


Synonyms:bartered equity, collateral cash, trade assets
Filed Under: financial-banking, mortgages, real-estate
Tags: banking, mortgage, realty
 

Definition of trade equity

trade equity
1. The exchange of property as part of a down payment when opting to buy another property. Other properties and vehicles are commonly used in trade equity as partial down payment.

Related Terms and Acronyms:

  • boot   Cash or other property used in an exchange to make the values of property traded equal. For instance, if you trade in a delivery truck on a new model, the cash you pay in addition to your old truck is boot.
  • down payment   The portion of the purchase price a buyer pays, in cash, at the time the loan originates.
  • exchange   A trade of property for other property or services. Like-kind property exchanges are a popular tax-deferral strategy.
  • negative-equity financing   Financing for new car buyers who owe more on their trade-in than the car is worth.
  • swap   An agreement between two businesses to exchange commodities, payments or other financial products to reduce the risk of volatile market conditions or to obtain a better price or rate. For example, interest rate swaps, where floating rate interest is exchanged for fixed rate interest, protects a corporation against rises in rates or allows it to take advantage of a better rate. A cross-currency swap enables two parties to enter into an agreement in which one exchanges its currency for the other's to meet their separate requirements.
  • sweat equity   The value of the work put into a house by its owner. This can be used in place of a full down payment. Up to and including 50% of a down payment.

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