Leverage Language

Did you know that you can potentially be sitting on equity? 

Not many people really understand exactly what’s happening when you fully own a house or have paid down some of your mortgage. In simple terms, the more you pay down your mortgage, the more equity you’re building in your building (no pun intended). That equity can be used to finance future real estate purchases, hence leveraging your equity.

How to know if you have home equity ? 

-The best thing to do to know not only how much or if you have equity is to get your house appraised.

Next, use this simple calculator to help you find how a quick estimate of how much equity you have  (we’re using 200,00 as a very unrealistic example )

                 -Home value = 200,000  —> 80% of value ( 200,000 x 0.8) = 160,000

                 -How much you still owe on mortgage = 60,000

                 -80% of your home’s value- amount you owe in mortgage = 160,00-60,00

                 -How much you can possible qualify for for a second mortgage = 100,000 $

-This is just an estimate and you should seek professional mortgage advice. 


When to use Home Equity Loan ? 

      -Home renovations

      -New Home purchase

      -A new vehicle

       -Your business

      -Debt Consolidation


How to get equity from your home ? 

-Home Equity Loans → These types of loans use your house as collateral. The lender will allow you to borrow money based on the value of your house. You can borrow a maximum of 80% of your properties appraised value, minus the money you have left to pay on the original mortgage.

-HELOC→ This is not a loan, it’s a line of credit. Unlike a loan which is basically a large sum of money, with a line of credit, you’ll have access to use the amount of money as you wish instead of getting the amount in full all at once.

-Refinancing→ When refinancing, you’re creating a new mortgage which will replace the old one. In doing this, you will have access to some of the equity that you have paid off.

-Second Mortgage→ This type of option is basically what it is, a second loan taken out on your property. Your house will act as collateral. This means now you have 2 separate mortgages and “loans” to pay.


All in all, knowing how much equity you have in your current house can definitely help finance future purchases that you might be wanting to make. At the end of the day, you can use your house to pay for things which is a bit crazy to think but hey, we’re in 2022, anything is possible.


If you have any questions, feel free to give me a call.