How To Get Access The Equity In Your Home

If you’ve been a homeowner for many years, chances are your property value has increased significantly. One advantage of homeownership is the opportunity to build equity. Home equity growth, partnered with the security of living in your own home, is why most Canadians believe homeownership is the best choice for them!

Simply put, home equity is the actual market value of your property minus what you owe. For instance, if your home has a market value of $900,000 and you owe $300,000, you have $600,000 in home equity.  

With much lower interest rates than other credit options, your equity can drastically improve your financial situation.  Here are four options to consider to access equity in your home without selling it:  

1.Refinance your Mortgage

Assuming you qualify for the mortgage, most lenders will allow you to borrow up to 80% of your property’s value by refinancing. This could give you access to the funds you need to upgrade your kitchen, add a home office or consolidate higher interest debt. 

2.Reverse Mortgage

A reverse mortgage allows Canadian homeowners who are 55 and older to turn the equity in their home into tax-free cash. There is no income or credit verification, you maintain ownership of your home, and you aren’t required to make any mortgage payments. The full amount of the mortgage will become due when you decide to move or sell. This is an excellent option for those that are opting to "Age in Place" in the comfort of their own homes. 

3.Home Equity Line of Credit (HELOC)

A Home Equity Line of Credit allows you to set up access to the equity you have in your home, but you only pay interest if you use it.  Unlike a conventional mortgage, a HELOC doesn’t have an amortization schedule, so you’re only required to make the interest payments on the amount you’ve borrowed.  This is a fantastic option if you know you have expenses coming up but want to maintain flexibility in the amount and timing of what you borrow. 

4.Second Position Mortgage

If the cost to break your mortgage is really high, but you need access to cash before your existing mortgage renews, consider a second mortgage.  The cost can be high for second mortgages, but it is often less than a penalty to break the mortgage. A second mortgage can be a short term solution to get you the funds you need now and can be rolled into your low-interest mortgage when it comes up for renewal.    

Contact us at 604-618-2017 to find out which option will work best for your unique situation. Our professional advice is always free.