Have you already paid all or almost all of your mortgage? If so, you have an asset that you can grow, and gives you access to a borrowing rate that is lower than the average personal loan. But why should you remortgage your house, and how should you proceed?

Use your home equity

The strategy of refinancing your mortgage can give you access to up to 80% of your home’s value, minus the outstanding balance of the loan. You can also benefit from an interest rate that is generally lower than that of personal loans and other loan products.

This strategy is all the more interesting since the value of your home has probably increased since the initial purchase. In fact, property values have increased by 143% in Québec since 2000*. This means that a home bought fifteen years ago is worth much more today, in addition to a lower remaining loan balance. You would then have access to the margin between the two which can be substantial.

For unexpected situations

With mortgage refinancing, you can consolidate your debts while benefiting from historically low interest rates. You will also have an amount of money to invest in savings vehicles such as a RRSP or TFSA, or in other various investments, depending on your investor profile and risk tolerance. Remortgaging your home can also be an option to consider in the event that you need a large sum of money. The best way to make an informed choice is to meet with your mortgage broker or financial institution. They can help evaluate your options and give you advice as to the best choice for you.

Like any other strategy, there are risks involved in remortgaging your home. Nonetheless, this option could help make your home equity work to your advantage. It is up to you to decide if the benefits outweigh the risks.

*Source: Québec Federation of Real Estate Boards