Home equity is the difference between the value of your home and how much you owe on your mortgage. When used right, it can open many doors. Below you will find three ways to pull your equity along with three ways to use the equity.
HELOC: Home equity line of credit
This revolving credit option is offered by most major financial institutions and is a great option to pull home equity. There are minimum qualifications to apply with the main one being 20% equity in the home. HELOC’s do offer low interest rates and flexible payment options.
Refinance: In most cases you can refinance to borrow up to 80% of the appraised value of your home, minus the balance on your mortgage or any other loan against the home. It is always worth looking into at the end of your mortgage term to re-evaluate current interest rates and your home value.
Reverse mortgage for home owner: You can pull up to 55% of equity of your home in a reverse mortgage. To qualify for a reverse mortgage you must be over 55 years of age and have no loans against the house. In most cases this loan does not have strict repayment plans however there is a higher interest rate than traditional mortgage.
Now that you have access to the funds, time for the fun part! Some great, high value options for using the equity to your advantage!
High value home improvements
– Do the roof that you have been putting off every winter
– Replace windows with high performance, triple pane windows to keep heat in
– Add in a basement suite if you have the space for that rental income
– Paint! A fresh coat of paint on the interior and exterior of your home will add a fresh look and enhance curb appeal immediately adding value
– Insulate! Some added insulation around windows, door & the attic will keep the home warm and require less heating
Personal investment
– Increase your personal value; complete a certification that can increase your salary and/or additional income
– Speak to a financial advisor about a savings account – let that money grow
– Start a business – everyone has thought about it at some point – make this your break
Purchase Property
Our favourite way to use equity! Grow your portfolio! Use your equity to buy that vacation house, ski chalet or even rental property! We can help you get there.
