Definition of "Trading on equity"

Also called financial leverage. The use of borrower funds to magnify return. Trading profitably on the equity, also called favorable financial leverage, means that the borrowed funds generate a higher rate of return than the interest rate paid for the use of the money. The excess accrues to the benefit of the owner because it magnifies, or increases, his or her earnings.

image of a real estate dictionary page

Have a question or comment?

We're here to help.

*** Your email address will remain confidential.
 

 

Popular Real Estate Terms

Generally, a legal notice implies a method of official notification to an individual, organization, company, or the public that a particular event is about to occur. We can call a ...

federal tax on gifts made and estate proceeds. ...

Roof having less than a 10 degree slant. ...

Payment made instead of taxes, For example, a tax-exempt institution, such as a state government complex of buildings, may make an offsetting in lieu of tax contributory payment to the ...

The term assessed value is used to define the dollar value of a property for the applicable taxes. The evaluator, a tax assessor, determines the property’s assessed value for tax ...

The restitution of a property insurance policy that has lapsed due to nonpayment of premiums. ...

Geographic location that is gradually being developed as an urban area. ...

Misuse, alteration, destruction, or neglect of land by an individual right-fully in possession that breeds a significant and permanent reduction of its value to the legal interest owned by ...

A deed in which two or more people in an indenture agreement have reciprocity and obligations toward each other. ...

Popular Real Estate Questions