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First off, let’s start by discussing what “equity” is. Equity
is like your home “working” for you while you sleep. It
is the difference between the value of your home, and the balance
left owing on your mortgage. Example; your home is
worth $250,000 and your mortgage owing is at $150,000. You
have $100,000 worth in equity in your home. Herein lies
the power in ownership. As time goes by, typically the
value in your home will go up. This is not a rule written
in stone, however over time it should work to your benefit. Ownership
x Time = Equity Gains. Whether or not you decide to do
anything with your equity is up to you.
Equity Take-Outs
Now that we know what equity is, just how do you go about accessing
it? What are the benefits to drawing from it?
Rule
#1 – do not decide to access the equity
out of your home on a rash decision, or on a whim. There
are contributing factors that you may not be aware of at the
time of your decision.
Firstly, think about what it is
that you want the money for? Are you renovating, or adding
onto your home? Maybe the kids need braces? Whatever
the reason, we can tell you which route is most advantageous
for you.
When you draw equity from your home, you may be “interrupting” your
current mortgage situation. Depending on the situation,
sometimes it may be necessary to get out of your current mortgage,
and register a new one. Factors such as; your current interest
rate, your payout penalty (if applicable), lawyers fees (if applicable),
a new or higher mortgage amount, must be taken into consideration. Perhaps
seeking a line of credit secured against your home is the answer?
Talk
to us first and let us assist you in providing
the professional mortgage advice you need before you proceed. You
likely have more than one option.
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