Building your home equity comes with owning property in Canada. As you pay mortgage for your property, you build equity that can grow big through the years. Add to this the fact that your home equity will also rise together with any increase in property value. How can you benefit from this? How can you use your equity without having to sell your home?
Check How Much Equity You Have
The first thing that you should do is to verify that you do have home equity. This could come up as a no-brainer for someone who owns a property but know that the amount of your home equity plays a big role in determining the ways that you can access it and to what extent.
The most accurate way of determining your home equity is to have your house appraised and then subtract all existing debts from the appraised value. You need the appraised value because home equity is computed as the home’s current market value minus all the existing liabilities on the property which includes debt. If your home’s appraised value is $1,000,000 and you owe about $350,000 left for it, then your home equity is $650,000 which may qualify you for a variety of home equity loans.
You can access your home equity without selling your property or liquidating your assets by getting a home equity loan or by applying for a second mortgage.
Why Use Your Home Equity?
Your home equity is one of the biggest assets that you have. It is a big nest egg of money that you can access in times of need or if you want additional funds to further improve the value of your home.
With a home equity loan, you can:
- Pay for home renovations
- Get needed home improvement features
- Pay for a new car
- Finance your children’s schooling expenses
- Channel more money into your business
- Consolidate your debt to save money
Anything that would need a big chunk of money can be a good reason to access your home equity. There are many smart uses of home equity loans.
Ways to Access Your Home Equity
You can get a home equity loan in the guise of a HELOC or a second mortgage. You can get a home equity loan wherein you borrow money by using the value that you built in your home as collateral. It is easier to get approved for this kind of loan because you are offering security to the lender as compared to simply trying to get a personal loan from a bank.
You can get a HELOC which is a type of home equity loan if you want a revolving line of credit with a high ceiling value. This will give you a lot of flexibility in terms of only using the amount you need and only paying interest for the amount you actually use.
Another option is to get a second mortgage which will allow you to access a chunk of your home equity as a lump sum. This is a good choice if you have a one-time big expense that cannot be covered by savings alone.
Contact us if you have any questions about applying for a home equity loan. Do you know that you can get a home equity loan even with no income? Talk to us and we will help you use your home equity soon!