Home Equity
Quick Definition
The portion of your home's value you actually own, free of mortgage debt.
Full Explanation
Home equity is the difference between your home's current market value and the outstanding balance on your mortgage and any other loans secured against the property. For example, if your home is worth $600,000 and your mortgage balance is $350,000, your equity is $250,000 (41.7%). Equity grows as you pay down your mortgage and as the property value appreciates. Equity can be accessed through a HELOC, home equity loan, or by selling the property. It is often the largest component of a Canadian household's net worth.
Related Terms
HELOC (Home Equity Line of Credit)
A revolving credit line secured by your home equity, up to 80% LTV.
Mortgage
A secured loan used to purchase real estate, with the property as collateral.
Loan-to-Value Ratio (LTV)
The percentage of a property's value financed by a mortgage.
Refinancing
Replacing an existing loan with a new one, usually to get a better rate or access equity.
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