Your home equity is the market value of your property minus what you still owe on it.
If your home is worth $600,000 and you owe $350,000, your equity is $250,000. Part of that can be made accessible without selling. For most homeowners it is the cheapest source of financing they have.
Three ways to access it
Refinancing. We replace your current mortgage with a larger one and you receive the difference. If you are mid-term, a penalty may apply — we calculate it before deciding whether the move is worth it.
A home equity line of credit. An amount available that you draw on only when you need it, with interest on the balance used. Flexible, but variable rate: your payments move with the market.
A second mortgage. An additional loan that sits behind your existing mortgage without touching it. The rate is higher, but it avoids breaking a good term you are already in.
What people use it for
Consolidating high-interest debt such as credit cards and personal loans, financing renovations, funding a down payment on a rental or a cottage, paying for education, or creating a cash cushion for a self-employed household.
The part that has to be said
Borrowing against your equity turns unsecured debt into debt secured by your home. It usually lowers the monthly cost, but it stretches the repayment period and it puts your property on the line. Consolidating debt without fixing what created it usually leads to recreating it. I will tell you plainly if I do not think this is the right move for you.
How much you can access
The rules vary by lender and by type of financing, and they change over time. The amount also depends on your income, your credit and the appraised value of the property. The simplest approach is to run the numbers together using your actual figures.