If you’ve owned a home in Saskatoon for even a few years, there’s a good chance you’re sitting on considerably more equity than you realize.

Our real estate market has continued to push higher, and we’ve recently seen another jump in home values. For existing homeowners, that increase isn’t just good news for the eventual day you decide to sell. It may give you access to equity you can put to work today.

First, What Is Home Equity?

Home equity is simply the difference between what your home is worth today and what you still owe against it.

For example, imagine you purchased your home several years ago for $400,000. Today, it may be worth $525,000 and perhaps your mortgage has been paid down to $320,000.

That would leave you with approximately $205,000 in equity.

And that’s where refinancing can become interesting.

In Canada, homeowners can generally borrow against their home equity up to certain lending limits, with refinancing commonly available up to 80% of the appraised value of the property, subject to lender approval and qualification requirements.

What Could You Do With That Equity?

Refinancing essentially allows you to restructure your mortgage and potentially access some of the equity that has accumulated in your property.

That money could be used for things like:

• Renovating your home – kitchens, bathrooms, basements, windows, flooring, landscaping or a major addition.

• Paying off higher-interest debt – credit cards, vehicle loans, lines of credit or other debts may carry significantly higher interest rates than mortgage financing.

• Investing back into the property – making improvements that could increase the enjoyment, functionality and potentially the future resale value of your home.

• Helping with a major purchase or expense – education, a business opportunity, another property or other large financial needs.

• Consolidating several monthly payments – depending on your situation, combining higher-interest debts into your mortgage may simplify your monthly finances.

The important part is that refinancing isn't free money. You're borrowing against your home and increasing the amount you owe, so the numbers need to make sense for your particular situation. There can also be appraisal, legal and other financing costs involved.

Rising Home Values Can Change the Equation

This is the part many homeowners overlook.

You might still think about your home's value based on what you paid for it five, eight or ten years ago. But your lender isn't necessarily concerned with what you originally paid. The current appraised value of the property is an important part of determining how much financing may be available.

That means a rising Saskatoon market can create equity without you doing anything other than owning the home, while every mortgage payment you've made may have been building additional equity at the same time.

The Saskatchewan REALTORS® Association's MLS® Home Price Index is specifically designed to track changes in residential property values over time and can show how values have changed across different markets, property types and neighbourhoods.

A Simple Example

Let's say your home is currently worth $600,000 and you owe $350,000 on your mortgage.

At 80% of the home's value, the lending threshold would be approximately $480,000.

$480,000
minus $350,000 owing
= up to approximately $130,000 of potential available equity

That doesn't automatically mean you should borrow $130,000, or that every homeowner will qualify for that amount. Income, credit, debt servicing, mortgage terms, appraisal and lender requirements all come into play. Refinancing with a federally regulated lender can also involve mortgage qualification requirements.

But it demonstrates why knowing your home's current market value can be surprisingly important.

Before You Call the Bank, Find Out What Your Home Is Actually Worth

This is where I can help.

If you're considering refinancing, renovating, consolidating debt or simply wondering how much equity you've built, I can prepare an updated market evaluation of your property based on what's actually happening in your Saskatoon neighbourhood.

You don't need to be thinking about selling.

Sometimes knowing your current home value is simply useful financial information. Once you have a realistic idea of what the property could sell for in today's market, you can take that information to your mortgage broker or lender and discuss whether refinancing makes sense for you.

If you bought your home a few years ago, you might be surprised by just how much equity you've built.

Curious what your home would be worth in today's market? Send me a message. I'd be happy to take a look and give you an updated market evaluation.

Kevin Leuschen Real Estate | Coldwell Banker Signature