Home “equity” is the portion of your property’s value that you own. As you pay down your mortgage, you build equity in your home. The more of your mortgage you pay off, the more your equity grows. Once you have paid off your mortgage in full, the value of your home is equal to its equity, thus giving you potentially hundreds of thousands of dollars in new purchasing power and borrowing capacity.
At Northwood Mortgage™ , we want to help you maximize the value of your home. This article will show you how updating your home can grow your home equity and your financial potential.
Before showing you how to grow your home equity, let’s review how you can access it.
How Can You Access Home Equity?
The ways you can use this equity to further your personal or financial goals are endless, but they most often require a home equity line of credit (or HELOC for short). With an overall borrowing limit determined by how much equity you have in your home, your HELOC is “secured” and offers interest rates that are frequently lower than what is offered on any other credit product, such as a credit card.
Making HELOCs even more attractive for everyday borrowers is that the limit increases as payments are made to the mortgage. Boasting low-interest rates and high limits that naturally increase over time, HELOCs are ideal solutions for long-term borrowing needs.
How Can Updating Your Home Increase Equity?
As your home grows in value, so too does its equity. However, the value of your home is dependent on various factors, only some of which are within your control. Factors include location, size, age, build quality, and upkeep. When it comes to boosting the overall value, there is not much you can do about the location once the home has been purchased, but other options remain.
Your best bet for boosting the value of your home is through renovations. Whether you are retiling your bathroom or finishing your basement, updating your home increases resale value and, therefore, your home’s equity.
It’s strange but true. By tapping into your home equity line of credit to finance renovations, you can add more equity to your home over time.
Are There Drawbacks to Using Home Equity?
However, these benefits also come with certain drawbacks. For borrowers with poor credit ratings, applying for HELOCs can be difficult. Though HELOCs derive their value and borrowing limit from the amount of equity you have built up in your home or investment property, the credit line itself is created between the borrower and the lending institution, such as a bank or a credit union. A good credit score is generally considered essential to open a HELOC.
Call Northwood Mortgage Now
If you are interested in using a home equity line of credit for renovations or other activities that can boost the overall equity in your home, look no further than Northwood Mortgage. Our knowledgeable and dedicated mortgage brokers have over 50 years of experience providing Canadians with best-in-class mortgage solutions and top-of-the-line advice in Toronto.
Call Northwood Mortgage today at 888-495-4825 or contact us here for all your home equity needs.