We’ve talked a fair bit lately about home equity loans, what they are, how they can be used and how to access funds for cottage, condo or home renovations. Home equity loans can be a great option for many financial situations but in order to qualify for a home equity loan, you have to first have equity in your home! Here are some things you can do to build or protect the equity in your home.
1. Make a large down payment. If financially possible, put down 20% or more when you purchase. Now only will you save on interest and mortgage insurance, but you’ll start with more equity right from day one.
2. Make your mortgage payments. Obviously this is a no brainer, but every month when you make your mortgage payment, the principal amount owing lowers and the equity in your home increases. If your lender does not apply a prepayment penalty, consider paying a little extra each month. Not only will this lower the principal and increase your equity faster but over time, it can save you a substantial amount in interest fees. Next time you buy or refinance, consider taking a shorter, 15 year term. Your monthly payments will be higher but you will build equity faster and pay much less in interest over time.
3. Increase the value of your home with improvements that actually add value. For this, you’ll need to do your research. Large, expensive renovations often cost more then they are worth when it comes to the value of your home. Smaller projects, like repairing damaged items, replacing outdated fixtures, adding attic insulation or cleaning up unmaintained landscaping can all help improve the value of your home without a huge expense.
4. Maintain your home to protect your equity. Don’t put off repairs or maintenance tasks as the long term damages can lower the value of your property which in turn means less equity!
If you’re looking to access the equity in your home, the experts at Tribecca Finance can help! To get started, simply Apply Online or call them at (416) 225-6900 and one of their lending specialists will be pleased to assist you.