# Refinance your mortgage to access home equity

Your home equity – your home’s value minus the balance of your mortgage – is available for you to withdraw and invest in a number of ways, including home renovations, additional real estate, post secondary education and much more. You can access up to 80% of your home equity by increasing the value of your mortgage through a refinance.

# Maximum refinance calculator

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## Determining available equity

(
\$300,000 current home value
x
80% maximum loan to value ratio
) -
\$100,000 current mortgage
=
\$150,000 available equity

To understand the math behind determining your available equity please consider the following example:

\$350,000
Home Value
\$100,000
Current Mortgage
Step 1 : Calculate maximum refinance
\$350,000 home value 80% =
\$280,000 max refinance
Step 2 : Calculate available home equity
\$280,000 max refinance \$100,000 current mortgage =
\$180,000 available equity

### Compare mortgage refinance rates

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## Other options to access home equity

In addition to a mortgage refinance you may also want to consider a home equity line of credit or second mortgage. There are key differences between each loan which we will now outline. A refinance is essentially a ‘re-mortgage’ and allows you to, therefore, access the same interest rates as a traditional mortgage, while a HELOC’s rates are slightly higher than their variable rate counter part. Further, unlike a refinance, with a HELOC all of the funds are not advanced upfront. You can withdraw as you please and only pay interest on the amount you take out. You are also not subject to a refinance penalty.

As a third option, you could look into a second mortgage, which may allow you to access more than the 80% loan to value ratio offered through a traditional refinance or home equity line of credit product. Second mortgages are almost accompanied with a much higher interest rate, are not offered by all lenders and thus are less popular.

Looking at all three options, you can see there are many factors to consider and the benefits must be weighed against the costs.

It is best to speak to a qualified mortgage professional who can help you evaluate your equity refinance options.

### Considering a mortgage refinance to access equity in your home?

Review your options and perform a cost-benefit analysis today with one of the qualified mortgage brokers on Ratehub.ca