You don’t have to own your home to have substantial home equity. Even if you’ve only paid down half of the mortgage amount, you can still draw on that money in times of need, if you’ve built up the right foundation. Today, more people are taking advantage of this equity than they have in over a decade.
If you have paid off your home, there are many more ways you can use all of that equity to your advantage. The following five options illustrate the best ways to leverage that capital to either save or make money over time.
Home Improvements
Using the equity in your home to finance home improvements, including updates, remodels, new appliances, or additions can improve the value of your home. Then, if you do ever sell it, you can get some or all of this investment back. This makes using equity to improve your home a smart decision.
Most homeowners applying for HELOCs today are looking at this option. It’s the most stable bet when you’re attempting to increase the value of your home. Most stick with minor updates to their new Calgary home. However, as equity grows overall, more and more people are requesting loans and credit lines for major remodels and more.
Rental Space or Property Investment
If you’re not entirely risk averse, using your home equity to help you purchase additional property is another strategy that could improve your financial position overall. If you’re not interested in maintaining a separate property, you could also use this money to revitalize a room or other structure on the property for rent.
This isn’t limited to apartments, either. Depending on what type of property your home is situated on and its zoning, it’s possible to rent fenced pasture, barns, storage silos, storage spaces, and more. The building of any of these structures could be easily financed through a low-interest equity-based loan.
Debt Consolidation
If you have more equity in your home than debt, it may be worth looking into taking that equity and using it to pay off any high-interest debt. In this way, it’s possible to pay less on this debt overall. Your credit score may also improve.
Education and Business Startup Expenses
Investing in your future is never a wrong decision, as long as you have a solid plan. Using home equity and home-equity-based loan products to finance your education or to start up a business will allow you to, potentially, increase your personal income while saving on interest. Further, your payments are unlikely to go up.
Home Equity is On the Rise
Whether you take advantage of a home equity loan or line of credit today or not doesn’t change the fact that you’re likely to get more for your money in the coming years. Home values, overall, have been steadily increasing since 2012.
Considering this, if you plan to stay in your current home for the next handful of years, you may want to invest in it. Keeping it in great shape and up-to-date can help ensure that when it’s time to sell or take out an equity loan, you’ll get as much of a return as possible.
