If you’ve been making mortgage payments for years now, you’ve been working toward building up home equity. As a homeowner, once you have enough equity built up in your home, you can tap into it and turn that equity into cash to fund home renovation projects, consolidate debt, fund your dream wedding and more! If you’re curious about what home equity is and how you can make it work for you, we’ll provide the basics so you can get a better understanding of your options.

Top Ways To Use Home Equity

Home Improvements

When you own a home, it can seem like there are infinite home improvement projects to take on, but more often than not, your budget just won’t allow for it. Tapping into your home’s equity to fund these projects, if planned properly, can actually increase the overall value of your home and provide a solid return on investment (ROI). If you’re thinking about leveraging your equity to take on some home improvement projects, make sure you set yourself up with a realistic/accurate budget and do your research to learn more about which improvements are more likely to bring a solid ROI.

College Costs

Saving up for an education can help take the financial burden off your children when they’re ready to pursue post-secondary options, but it isn’t always realistic. If you’d like to set some money aside for the purpose of funding someone’s education, tapping into your home equity can help make that a reality without setting you back financially.

Debt Consolidation

Debt consolidation is the process of combining all your debt into one place – taking credit card debt, personal loans, etc. and moving them all into one location with one overarching interest rate. Using your home’s equity to consolidate your debt can help you make a big dent in high interest rate debt like car loans or credit cards. It’s wise to ask questions and pay attention to the home equity terms and its total interest costs to ensure it’s a wise financial decision for you.

Emergency Expenses

If you find yourself in a less-than-ideal financial situation due to some emergency expenses, using your home’s equity to pay those bills could be a good option for you.

Wedding Weddings are expensive, and sometimes we don’t have those funds just sitting around in a bank account waiting to be used. If you’re planning to get married but aren’t sure how you’ll pay the bill, you might want to consider using your home’s equity to free up some extra cash and help you avoid any hefty fees or interest rates on late vendor payments.

Home Equity Loan

A home equity loan works similar to any other type of secured loan, but the main difference is that it uses your house as collateral. As part of this process, your lender will allow you to borrow a specific amount of money that’s based on the value of your home and you’ll be charged interest and have fixed installment payments to pay it back. In order to qualify, you need to own a house (which needs to be appraised by your lender), have paid off a significant portion of your mortgage and be financially secure enough to handle taking on more debt.

You can use the cash from a home equity loan to fund home improvement projects, consolidate your debt and accomplish other financial goals.

Home Equity Line Of Credit

A home equity line of credit (HELOC) is a revolving line of credit that lets you borrow the equity in your home at a lower interest rate than a traditional line of credit. You’ll have to pay interest on the money you borrow through a HELOC but you’re able to borrow and repay over and over as you need cash, up to a certain maximum credit limit. The lender uses your home as a guarantee that you’ll pay back money that you borrow. To apply for a HELOC, you must have at least 20% equity built up in your home.

Equity-Based Mortgage

To put it simply, equity is the amount of your home that you own. When you have a mortgage, you gain equity as you make your monthly payments toward the balance. Over an extended period of time, this gives you the ability to earn a great deal of equity in your home as you make your payments. The value you have gained can then be used in an equity-based mortgage.

Instead of using a traditional income, credit and other standard criteria for qualification, an equity-based mortgage bases your loan qualification on the value of the property and its potential marketability. If you’re interested in an equity-based mortgage, you’ll want to make sure that you meet the criteria and understand the qualifications beforehand.


  • You’ll need a minimum 25% down payment (a larger down payment may be required)
  • The overall quality of the real estate property will be a factor in your approval, along with the location and marketability
  • All applications are reviewed on a case-by-case basis


  • You may be able to borrow up to 75% of the home’s value
  • Higher rates typically apply, depending on your individual credit history

Whether you’re planning to borrow against the equity of your home or just want to learn more about the process, make it a point to check on your credit score at least annually, create a realistic budget and understand all the costs/requirements associated with choosing to borrow against the equity of your home. It’s always advisable to consult a professional before you make any big decisions regarding your mortgage, as there are a lot of factors (and costs) to consider before you make your decision. Want to learn more and see if using your home’s equity is a possibility for you? Get in touch with our team today!