The difference between your property's current market value and the amount you owe on your mortgage. If your home is worth $800,000 and you owe $500,000, you have $300,000 in equity. Equity builds over time as you pay down your mortgage and as the property (hopefully) appreciates in value. You can access equity through refinancing, a HELOC, or by selling.
Why It Matters
Equity is your real wealth in real estate -- it's the portion you actually own. Many investors use equity in one property to finance the purchase of another, creating a portfolio over time. Understanding how equity grows helps you make smarter decisions about paying down your mortgage faster versus investing elsewhere.
Real-World Example
You bought a semi-detached home in the Junction neighbourhood for $900,000 five years ago with a $720,000 mortgage. Your remaining mortgage balance is now $650,000, and comparable homes in the area are selling for $1.15 million. Your equity has grown from $180,000 at purchase to $500,000 today -- a combination of $70,000 in mortgage paydown and $250,000 in market appreciation. You use a HELOC against this equity to fund a 20% down payment on a second investment property.
Ontario & GTA Context
In Ontario, you can access your home equity through refinancing, a Home Equity Line of Credit (HELOC), or a second mortgage. Most lenders will lend up to 80% of your home's appraised value minus the outstanding mortgage balance. Capital gains on the sale of your principal residence are tax-free in Canada, which makes equity in your primary home one of the most tax-efficient wealth-building tools available.
How It Works in Practice
Track your equity position annually by noting your mortgage balance and estimating your home's current market value. When equity reaches a meaningful level, consider whether accessing it for investment purposes makes sense. A HELOC offers flexible access, while refinancing provides a lump sum at typically lower rates. Consult a mortgage broker to compare options.
Common Questions
How do I build equity in my home faster?▾
Can I use my home equity to buy another property?▾
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