Home equity is the difference between your home’s market value and what you still owe on your mortgage. Understanding home equity is essential for buyers and homeowners because it plays a major role in long-term financial planning and wealth building.
Simply put, the more of your home you own outright, the more equity you have.
How Home Equity Builds Over Time
Home equity typically grows in two ways:
- Paying down your mortgage with each monthly payment
- Property value increases over time due to market conditions or improvements
For example, if your home is worth $800,000 and your mortgage balance is $500,000, you have $300,000 in home equity.
Why Home Equity Matters
Home equity provides flexibility and financial leverage. It can be used to:
- Help fund renovations or upgrades
- Support future home purchases
- Assist with major life expenses
- Increase long-term net worth
In markets like Greater Victoria, where home prices have historically trended upward over the long term, equity can become a significant asset.
Equity vs. Renting
Rent payments build no equity. Once the payment is made, the money is gone. With homeownership, a portion of each mortgage payment contributes to building equity, even during stable or slower markets.
This difference is one of the key reasons many buyers choose to purchase when they plan to stay put for several years.
How Much Equity Do You Need?
There is no universal benchmark, but more equity generally means:
- Better refinancing options
- Lower borrowing risk
- Greater financial security
That said, equity takes time to build. It works best as a long-term strategy rather than a short-term gain.
Final Thoughts
Home equity is not just a number on paper. It represents ownership, stability, and long-term value. Whether you are a first-time buyer or a long-time homeowner, understanding how equity works can help you make more informed real estate decisions in Victoria’s market.
If you are curious how much equity you may be able to build, reviewing your options early can make a meaningful difference.
Dom L., 5-Star Review, via Google
“After months of searching and giving us their honest advice, we finally bought a place while out of town. We only had a virtual tour of the site, but we felt very comfortable making an offer because they understood what we were looking for. I would recommend going to Faber group as they are knowledgeable, professional and resourceful.”
Faber Real Estate Group
Royal LePage Coast Capital Realty
📞 250-244-3430
📧scott@fabergroup.ca
ℹ️ Scott Faber Personal Real Estate Corporation
ℹ️ Cal Faber Personal Real Estate Corporation
Vanessa Wood, Zachary Parsons, and Sophie Taylor
“Building Lasting Relationships, One Home at a Time.”