Accessing Your Home’s Equity With a Loan

There are fundamental variables that come into play when looking at the state of your home’s equity. First and foremost, it is essential to understand what equity is and how it impacts you and your home’s value in both the present and future. 

Equity, on paper, is the split between your property’s current market value — which is subject to change — and how much you are left owing on the mortgage. 

If you want to leverage your home’s equity while also providing you with the means for other large-scale purchases, a home equity loan may be what’s best for you. Harnessing your home’s equity essentially provides you with access to crucial funds without having to sell your property or take out a high-interest personal loan. 

In Canada, lenders provide a common limit of upwards of 90% of your available equity, so if you have paid down a substantial chunk of your mortgage, this option is more than just viable, it’s beneficial. This also comes into play with market shifts, meaning if your home’s value has increased over time, so has its baseline equity. 

So what are the fundamentals of a home equity loan?

In essence, a home equity loan is a second mortgage that is locked into a fixed amount over a certain period of time. It mirrors your primary mortgage as well, as each payment is divided between both interest and principal. Keeping this in mind, a home equity loan has a higher interest rate on average and this is due to the risk on the lender’s behalf if your home forecloses. 

If you have any questions surrounding whether or not you should look into home equity loans, you can always talk to one of our financial advisors. We are always on standby to help you get the most out of your home’s value. Book an appointment today.