Equity of redemption (also termed right of redemption or equitable right of redemption) is a defaulting mortgagor’s right to prevent foreclosure proceedings on the property and redeem the mortgaged property by discharging the debt secured by the mortgage within a reasonable amount of time (thereby curing the default).
The defaulting mortgagor must exercise the equity of redemption within a certain amount of time (before an absolute foreclosure on the property). The equity of redemption right only exists from the time of default to the commencement of foreclosure proceedings. In many jurisdictions, the defaulting mortgagor also has a statutory right of redemption within six months following the foreclosure sale and becomes entitled to any surplus from the sale proceeds in excess of the outstanding mortgage.
[Last updated in July of 2021 by the Wex Definitions Team]
