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Home Equity

Home equity is the market value of a homeowner’s unencumbered interest in their real property that is, the difference of the home’s fair market value and the outstanding balance of all liens on the property. The property’s equity increases as the debtor makes payments against the mortgage balance, and/or as the property value appreciates. Home equity is sometimes called real property value.

Homeowners acquire equity in their home from two sources. They purchase equity with their down payment, and the principal portion of any payments they make against their mortgage. They also benefit from a gain in equity when the value of the property increases.

Using Home Equity

Equity is an asset, so it’s a part of your total net worth. You can take income or lump-sum withdrawals out of your equity someday if you need to, or you can pass wealth on to your heirs. There are several ways to put that asset to work.

Buy A New Home: Buy your next home: You probably won’t live in the same house forever. You can sell your current home and put that money towards the purchase of your next home. If you still owe money on any mortgages, you won’t get to use all of the money from your buyer, but you’ll get to use your equity.

Borrow against the equity: You can also get cash and use it for home renovation. Maybe it just needs some new landscaping, an expanded kitchen, or a swimming pool in the backyard! A lot of Canadians have taken advantage of the historic low mortgage rates and rising real estate values and have tapped into their home equity. There’s never been a better time to access the extra funds that can help bring your home to that next level of comfort.

Fund retirement: You can also spend down your equity in your golden years using a reverse mortgage. Those loans provide income to retirees and don’t require monthly payments — the loan gets repaid when the homeowner leaves the house.

However, these loans are complicated and can create problems for homeowners and heirs. Always talk to the mortgage expert before taking any decision.


Home Equity Loans

Home equity loans provide you a large pool of money – often at relatively low interest rates. They’re also relatively easy to qualify for because the loans are secured by real estate. They are tempting but they are risky at the same time. Before you take money out of your home, look closely at how these loans work.

Home Equity Loan and HELOC

Home equity loans are a fixed-rate loan. The lender gives the borrower, a single, lump-sum payment. This loan is then paid back to the lender by the borrower over a set period of time based on the interest rate in the market at the time. The main point to note is that your payment and interest rate will remain the same over the lifetime of the loan.

HELOC ( Home Equity Line Of Credit) works like lines of a credit card and gives you more financial flexibility. A HELOC therefore comes with a fixed spending limit, which is mutually agreed upon when you take this kind of home loan on the basis of your property’s equity. The upside of using a HELOC is that it allows the borrower to spend any amount of money up to the predetermined limit at any given time, which can be paid back based on the current market rates of interest.

Benefits of Home Equity Line of Credit

Home Equity Line of Credit (HELOC) offers many advantages to borrowers. It is like a credit card because you do not have to pay the full balance at once, you only have to make monthly payments. Plus, once you do pay it down, you can access the funds over and over again.

A HELOC can be used for everything from home renovations to any other important financial need.

Get Professional on Your Side

Contact us to see whether HELOC would be better for you over second or third mortgage. Apply online and get free consultation.

Contact us by phone or send us an email.

HELOC/Second/Third Mortgage Application

Complete the form below. We will call you do discuss the HELOC and other options.

  • HELOC/Second/Third Mortgage Application

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