Home Equity
Unlocking the Value in Your Home
April 2025 | Home Equity
Unlocking the value in your home can be a smart way to fund major renovations or get a handle on high-interest debt. If you’ve built up equity—the difference between your home’s current value and what you still owe on your mortgage—you may be able to access that value through a home equity line of credit (HELOC), or by refinancing your mortgage.
Using Home Equity for Renovations
Many Canadian homeowners are choosing to renovate rather than move, especially with today’s housing market. Tapping into your home equity can provide the funds you need for upgrades, repairs, or even energy-efficient improvements. Refinancing your mortgage gives you a lump sum with a fixed interest rate and predictable payments, making it ideal if you know your project’s cost upfront. A HELOC, on the other hand, is readvanceable, meaning you can borrow what you need, when you need it, and only pay interest on the amount you use.
Renovating with home equity can be a wise investment, as certain upgrades may increase your home’s value. Plus, some government programs offer grants or loans for energy-efficient renovations, helping you stretch your dollars even further.
Using Home Equity for Debt Consolidation
If you’re juggling multiple high-interest debts—like credit cards or personal loans—using your home equity to consolidate can simplify your finances and potentially save you money. By rolling your debts into a single loan or HELOC, you’ll likely benefit from a much lower interest rate and have just one monthly payment to manage.
This approach can free up cash flow, reduce stress, and help you pay off your debt faster. However, it’s important to remember that your home is used as collateral. If you’re unable to make payments, you risk foreclosure, so it’s crucial to borrow responsibly and have a solid repayment plan in place.
Getting Started
To access your home equity, you’ll typically need at least 20% equity in your home and a good credit history. Lenders will review your finances, the value of your home, and your ability to repay. Whether you’re planning a dream renovation or looking to get out of debt, using your home equity can be a powerful financial tool—just be sure to weigh the pros and cons and consult with a mortgage expert to find the best option for your needs.
