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Ways to Access Home Equity

Posted on 9th Oct 2012 by Mark Stern



Did you know that once you access the equity of your home, you are also in the way of accessing funds for larger expenditures like home remodelling, room additions, purchasing investment property as second home and consolidating the interest rate of your debt? Most of the lenders are requiring the homeowners to meet all the guidelines for you to be able to turn your home equity into cash. And for you to do it, you should have good credit, sufficient and stable income and must have sufficient value to your home.


Homeowners have their own reasons why they want to access their home equity. They have their own will that drives them to access home equity. One of their reasons might be one of the following:


  • Home purchase: purchasing new investment property or home which requires larger amount of mortgage.
  • Consolidate debt: The high interest of your debt moved into lower debt interest.
  • Investment purposes: Homebuyers wants to buy new home or property or they want to invest in market and used it as mutual funds and stocks.


Most of the Canadians today take advantage of the low rate offered and locking 5 to 10 years of fixed mortgage. What do you think will happen if the owner of the property wants to access the traditional equity next to the mortgage maturity? Here are the following options that you can choose from:


  • Blend and Increase Mortgage – This option is one of the most popular options since most of the homeowners are now locking into lower rates historically. Like for example, your current mortgage interest rate and amount is 3.09% and $300,000. In this case. The homeowner will be required to access an additional amount of $150,000 home equity. The owner will add $150,000 to the existing balance on mortgage which is $300,000 with the recent market rate remaining.


  • Refinance Mortgage – In this option, paying the penalty, cutting the mortgage, legal fees and appraisals are required. This is considered as the priciest option upfront but this can only be the finest option unless the owner is locking into lower mortgage interest rate or giving higher mortgage interest rate.


  • Home Equity Line of Credit – For you to access home equity efficiently, the best and great way to do it is to make use of secured credit lines. In this option, the borrower will be required to pay for the amount that they borrowed as well as the funds that can be retrieved since this amount is revolving around credit. The amount or costs that are associated with Home Equity Line of Credit option are legal fees and appraisal, in which these are sometimes subsidized or covered by the mortgage lender.


The above-mentioned options will be very helpful if you want to access your home equity. You will not find difficulty in looking for an amount that can be used for specific purpose because once you have accessed your home equity; you will get enough mount to finance it. Home equity will allow you to get the amount that you need.

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