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Equity Formula

 

This is a formula to work out the equity on your property.

 

Equity)£)=)Market)Value)-)Balance)of)Loan

 

For example a property with a market value of £100,000 with an outstanding loan balance of £85,000 has £15,000 worth of equity.

 

Rental Cover Formula

Mortgage lenders often need to work out the rental cover of a mortgage to gauge the safety margin for their own risk, the rental from a property will be required to exceed the mortgage payments by approximately 130%. The formula being :

Rental)Cover)£)=)Monthly)Mortgage)Payment)X)130%

For example: A mortgage application needs to be approved by the lender. With a monthly mortgage repayment of £200, must realise at least £260 rent per month which equals 130% of £200. The rental cover can vary from lender to lender.