Why Home Equity Is Your Secret Weapon, Even Before You Sell

When I sat down with Mark and Elena last month, they told me they were worried: “We’re far from selling, but interest rates are making our payments tight.” Instead of focusing purely on buying or selling, I turned their attention to something they already had: home equity. It changed their mindset — and it can help you too.

What is home equity, and why it matters

Your home equity is simply the difference between what your home is worth today and what you still owe on the mortgage. Over time, that gap should widen as you pay down principal and (hopefully) home values appreciate.

Many people think equity only matters when you’re about to sell. But that’s not true. Equity is a powerful tool you can leverage before selling; To grow your wealth, fund renovations, consolidate debt, or even support your children.

Why now is a smart time to tap equity

Here’s what’s happening in Canada that makes home equity more valuable now:

• Affordability easing: Mortgage rates have dropped recently, and that has improved ownership costs.

• Cooling prices in hot markets: Some high-price regions are seeing slight declines.

• One million renewals looming: In 2025, many Canadians will renew fixed-rate mortgages. Those with equity have more flexibility.

With these shifts, equity isn’t just a safety cushion, it’s a strategic asset.

How people are using equity (real examples)

• Home renovations: Carla and Jamal needed a new roof and kitchen update. They tapped a portion of their equity (via a HELOC) to do the work now, increasing the comfort and resale value of their home.

• Debt consolidation: The Smith family had high-interest credit cards and a car loan. By borrowing against their home equity at a lower rate, they paid off the high interest debt and simplified payments.

• Down payment for second property: Some clients use equity in their existing home as part of the down payment on a rental or investment property, letting their property work for them.

Risks & best practices - tread smartly

Using home equity is powerful, but only if done carefully. Here are things to watch for:

• Don’t over-leverage: Leave a buffer. Just because you can borrow against equity doesn’t mean you should borrow it all.

• Interest costs & amortization: Understand how borrowing against equity (HELOC, second mortgage) will affect your monthly payments and total interest over time.

• Plan for rate changes: Some equity-based borrowing is variable. If rates rise, costs can climb.

• Focus on returns: Use equity in ways that generate value - e.g. improvements, investing, not just consumption.

Steps to tap your home equity wisely

1. Call your broker/lender for an equity assessment: find out how much is available without compromising safety.

2. Shop your options: second mortgages, HELOCs, refinance with cash-out, compare terms, fees.

3. Map your cash flow: run “worst case” scenarios to see how your payments behave with rate or market changes.

4. Use the equity smartly: improvements, investment, debt consolidation, but not “fun money” unless you’re very comfortable.

5. Monitor regularly: as your property value or debt changes, reassess your strategy.

Why this matters for almost any homeowner

Even if you don’t plan to move any time soon, your home equity gives you optionality. It means you have choices, financial levers you can pull when needed. In uncertain times, that's a strength many people undervalue.

If you like, I can send you a home equity calculator tool so you can see exactly how much equity you have and what borrowing might look like. Want me to get that for you?

Leanne Funston
Mortgage Broker
250-320-5514
[email protected]