If you own a home, you might be wondering if there is a way for you to leverage your property. There is a lot of buzz about this topic, but what does it really mean to leverage your home and how do you do it?
Before we dive into this, let me give you a simple example. In January 2017, the average price of a townhouse in Greater Vancouver was approximately $660,000. Now (in 2021), we’re looking at an average price of $815,000 for a townhouse. That is a $155,000 difference. So, what does a $155,000 increase in value mean? It creates something called equity.
What is equity? It’s money in your home that you can tap into. In simple terms, that $155,000 increase in the value of your home can be used to upsize or to buy more property. For example, let’s say you’re in a townhouse but your family has grown and now you need more space. Instead of having to liquidate and sell your current home, if you’d like to keep it, you can take the money from the increased value of your home (that $155,00), and use it as a down payment for your next property. You can then turn your townhouse into a rental. Alternatively, you could keep your townhouse and use that $155,000 equity to buy a rental. It all depends on your goals and strategic planning. So, it’s your choice – you could use your equity and upsize your current home, OR, you could use your equity to add more real estate to your portfolio.
If you your property has gone up in value and you want to leverage your home’s equity, the best thing to do is to work with a Mortgage Broker. Your broker may need to restructure your current mortgage so that you have access to the equity, and in some situations, you might even need an appraisal to establish your property’s increased value. A broker will show you exactly what you need to do if you want to use your equity to create a down payment.
As a home owner, it’s probably really nice for you to know that you have these options. Especially if your home has already gone up in substantial value. Leveraging your home’s equity can be a powerful tool in helping you achieve your Real Estate goals and dreams.
If you have questions about leveraging your home or if you are looking for a Mortgage Broker that can help you, reach out to me and I’ll steer you in the right direction.