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Definition of Equity of Redemption

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Definition: Equity of redemption is the right of an owner to redeem property securing a loan that has been accelerated prior to foreclosure.

Example: Mary is behind on mortgage payments, and the lender has accelerated the loan, demanding payment in full or foreclosure will follow. Mary can find another source of money, and under "equity of redemption," pay off the principle, interest and expenses, keeping the home.

In some states, there is also the Statutory Right of Redemption, providing a stated time in which, after foreclosure, the owner can redeem the property by paying off all demands and costs.

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