Equity ratio for real estate
Real estateThe equity ratio shows what share of the property actually belongs to you – i.e. is not financed with debt.
Example:Property €300,000, remaining debt €200,000 → equity ratio = 33%. That means one third belongs to you, two thirds to the bank.
Leverage effect:A low equity ratio leverages the return (in both directions). When prices rise you benefit disproportionately, when prices fall you lose disproportionately.