Equity. The equity in property is the difference between the value of property mortgaged or
otherwise encumbered and the amount of the obligation (debt) to secure which the property is
pledged. Thus, the equity in a loan is the difference between what the securities pledged as
collateral are worth and the amount borrowed on them. As a rule securities are accepted as
collateral by lenders of money at about 80 per cent of their market value —that is, a lender will
lend $80,000 on securities of the market value of $100,000 or will lend $100,000 on securities of
the market value of $125,000.
otherwise encumbered and the amount of the obligation (debt) to secure which the property is
pledged. Thus, the equity in a loan is the difference between what the securities pledged as
collateral are worth and the amount borrowed on them. As a rule securities are accepted as
collateral by lenders of money at about 80 per cent of their market value —that is, a lender will
lend $80,000 on securities of the market value of $100,000 or will lend $100,000 on securities of
the market value of $125,000.
 | |  | |  | |  | |  | |  | |  | |  | |  | |  | |  | |  | |  | |  | |  | |  | |  | |  | |  | |  | |  | |  | |  | |  | |  | |  |
| Copyright 2000 - 2010 by Dictionary of Accounting All Rights Reserved Accounting Resources Hunting Knives, Military Acronyms |