What Is Equity in a Property Portfolio?
Equity is broadly the value of property after relevant secured borrowing is taken into account. It helps landlords understand their financial position, but it is not the same as cash available after a sale.
Property value vs equity
There is rarely one figure that tells the whole story. Consider the property, market evidence, income, condition, finance and your wider objective when assessing the position.
How mortgages affect equity
Mortgage terms, outstanding balances, redemption figures and any early repayment charges can all affect the practical outcome. Check the current figures for the property and consider how the position fits with the rest of the portfolio.
Equity across several properties
This is one part of the wider portfolio picture. Look at the issue alongside your properties, finances, tenancies and objectives rather than treating it in isolation.
Releasing capital
This is one part of the wider portfolio picture. Look at the issue alongside your properties, finances, tenancies and objectives rather than treating it in isolation.
Negative equity
Negative equity generally means secured borrowing is greater than the current property value. Selling can therefore require careful discussion with the lender and appropriate professional advisers.
Selling selected properties
The right route depends on what you are trying to achieve, the properties involved and the practical constraints around them. Comparing the available routes before committing can make the decision clearer.
Practical takeaway
Review equity property by property as well as across the portfolio. Redemption figures, selling costs and tax can affect the eventual outcome.
What should you do next?
You do not have to decide before you understand your position. If a portfolio review would help, request a confidential portfolio valuation with no obligation to sell.