Equity
Equity is the difference between the current market value of a property and the outstanding mortgage balance.
The bigger your deposit, the lower the proportion of the loan in comparison to the property value. The less that a lender has to contribute to a property the greater their security and willingness to lend you the money will be.
A bigger deposit could also be seen as a stronger commitment to the purchase. Equity usually increases as the outstanding principal of the mortgage is reduced through regular payments.
Market values and improvements to the property also affect equity. Over time,
a proportion of your repayments will go towards reducing the capital that
you owe to the lender, so assuming the value of the property is unchanged,
the amount of equity you own will have raised.
Click for more mortgage glossary terms relating to remortgaging.