Source: Introduction to Law in Canada (2014). pp. 288 Bottom - 289 Top.

  In simplified terms, a mortgage is a kind of charge against land that secures a debt owed by the landowner. The modern concept of a mortgage differs from the traditional concept.

Traditionally, a mortgage involved transferring the landowner's title to the land to the lend- er. The lender would hold this title as security against the loan, with a promise to transfer title back to the owner once the latter had repaid the mortgage loan in full. If the owner/borrower (the mortgagor) missed a payment or otherwise went into default, the lender (the mortgagee, often a bank) was entitled to keep the land unconditionally. However, in equity, the mortgagor was given a period of time to come up with the balance—in other words, a redemption period (see the discussion of the Court of Chancery, in Chapter 2). The owner's right to redeem his property came to be known as the mortgagor's "equity of redemption"; it was valued at the worth of the property minus the amount of the mortgage debt still owing. Hence we now refer to a property owner's "equity" in the property, which refers to the net market value of his unencumbered interest in the property.

Why wasn't the Equity of Redemption instead only the amount of the mortgage debt still owing? This is what the mortgagor must pay, NOT the sentence coloured in gray.

  • 2
    Your equity isn't how much you owe; it's how much you own.
    – cHao
    Apr 7, 2018 at 14:20
  • If you own a property worth $600,000 with a $200,000 mortgage, then you could sell for $600,000, pay back the $200,000 and walk away with $400,000. The $400,000 is your equity. The higher the value, the higher the equity. The higher the mortgage, the lower the equity.
    – gnasher729
    Apr 7, 2018 at 14:50

1 Answer 1


The equity of redemption is the right to pay off the mortgage balance.

The value of the equity of redemption to the person obligated on the mortgage, a.k.a. the equity in the property, is the value of the property less the amount of the mortgage.

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