Understanding how to leverage the equity in your home starts with the basics.
What is leveraging? Leveraging is the concept of:
- Borrowing money
- Investing this borrowed money
- Making sure you cover the cost to borrow this money (i.e. the interest)
- Making a profit with this borrowed money (i.e. the return on investment or ROI)
Seasoned business people embrace and welcome leveraging in order to grow their respective companies.
Real estate, when approached with a business mindset, is a multibillionaire industry.
What is equity in real estate terms? Equity is the monetary portion of your home that you actually own. The longer you own property (and depending on your location), the value of your home is expected to increase over time. This is called appreciation. As the value of your home increases in value, so does the equity portion of your home.
The equity in your home is the current fair market value of your home (i.e. how much you could fetch if you were to sell it today) minus the mortgage or other property liens on the home remaining.
Now that we understand leveraging and equity, let’s look at ways to leverage the equity in your home.
Watch the full video recap here from this week’s Tuesday Women & Money Montreal Zoom.
Lin Sok is an Independent Financial Security Advisor and Mortgage Broker with Groupe hypothécaire Orbis.