A Guide to Your Home Equity and Using It for a Loan in 2022

As a homeowner, there are several responsibilities that you would have to shoulder throughout your time in owning a home. Aside from maintaining the property, there’s also paying the mortgage that you had initially taken to purchase the home. Although it might seem like a process of just paying everything back, you actually acquire something in the process.

Paying down a mortgage entails growing home equity that you can utilize in the future. If you’ve been putting down money for a while now, you might just have enough that you can use for a loan this 2022. Continue reading to learn more about it:

Knowing Your Home Equity

Home equity comes when you pay your mortgage. Upon paying it off, you should have a sizable amount of home equity. If you’re still in the process, how much time and money are invested into paying your mortgage will translate to the size of your home equity. 

The longer you’ve been paying things off, and the closer you are to completion, the bigger your equity would be. You could get a lump sum of money for the home equity you’ve built, though you would have to consult a property finance service provider on how much you’re entitled to.

Using Your Home Equity

Some homeowners who learn about home equity may question how they can even utilize this in the first place. There are various ways that you can actually use your home equity, with some exchanging it to acquire a loan or funding for certain projects.

If you’ve wanted to renovate your home for a while now or thought about adding a house extension to the place, accessing your home equity can make that possible. You could also use home equity for other aspects of your life, like car costs, school expenses or debt consolidation. 

Accessing Your Home Equity

There are a variety of ways to access home equity, with all of these means bringing quite the advantage. A property finance service provider can shed light on what kind of method would be the most beneficial for you, but here are some suggestions to get you started:

• Home Equity Loan. A home equity loan is the most common way to access your home equity, using it as collateral for you to borrow and secure cash. How much money can be borrowed depends on the value of your home and the amount of home equity available.
• Home Equity Line of Credit. A HELOC may be similar to a home equity loan where you can attain a sum of money, but it follows a model of revolving credit. Utilize the credit when you want to, but you’d have to pay the full limit to regain access afterwards.
• Mortgage Refinancing. Mortgage refinancing is a popular practice that allows you to create a new mortgage loan to replace the old one, thanks to your home equity. This can be quite good if you’re able to bargain a better set of terms with a lender. 

Conclusion

By understanding your home equity, you can get a better sense of the feasible loans you can generate from them. With the mortgage rules in Canada making homes in provinces less risky and more affordable, now’s a good time to see what you can achieve with your assets.

Looking for a home equity loan in Ottawa? Mills Financial Group offers home equity loans and other property financing services in Canada. Get in touch with us today!