Equity

Understand what equity means in Canadian real estate, how it's built over time, and why it’s an essential part of homeownership and financial planning.

Equity

May 22, 2025


What is Equity?

Equity is the difference between a property’s current market value and the outstanding balance of any mortgages or liens on it. It represents the homeowner’s ownership stake in the property.

Why Equity Matters in Real Estate

In Canadian real estate, building equity is one of the main financial benefits of homeownership. As property values increase and mortgage balances decrease over time, the owner’s equity grows. This can be leveraged for various purposes, including refinancing, securing a home equity loan, or selling the property for a profit.

Equity also provides a financial cushion during market downturns or unexpected life events. A homeowner with substantial equity may be better positioned to weather short-term declines in property value or borrow against their home in times of need.

Equity can grow through:
- Regular mortgage payments (reducing principal)
- Property appreciation
- Renovations or upgrades that add value

Monitoring equity is crucial for financial planning and long-term wealth building. Tools like mortgage statements, appraisals, and HELOC assessments help track equity over time.

Example of Equity in Action

A homeowner in Halifax owns a house valued at $800,000 with $500,000 remaining on their mortgage. Their equity is $300,000.

Key Takeaways

  • Represents the owner’s stake in their home’s value.
  • Increases through mortgage repayment and property appreciation.
  • Can be used to access loans or support retirement planning.
  • A key metric in real estate investing and borrowing.
  • Crucial for financial stability and long-term wealth.

Related Terms

  • Home Equity Loan
  • Appraisal
  • Mortgage Principal
  • Market Value
  • Refinance

Additional Terms

Public Realm Improvements

Public realm improvements are enhancements to public spaces such as sidewalks, parks, plazas, and streetscapes, often funded or contributed by. more

Mortgagee in Possession

A mortgagee in possession is a lender who takes control of a property after borrower default, but before foreclosure or power of sale. The lender. more

Lease Surrender Agreement

A lease surrender agreement is a negotiated contract between a landlord and tenant that ends a lease before its scheduled expiration. Terms may. more

Green Infrastructure

Green infrastructure refers to natural or engineered systems that manage stormwater, reduce heat, and improve sustainability in developments.. more

Escrow Holdback

An escrow holdback is a portion of funds withheld at closing and held in escrow until specific conditions are met, such as completion of repairs,. more

Underused Housing Tax

The Underused Housing Tax (UHT) is a federal annual 1% tax on the value of vacant or underused residential property owned by non-resident,. more

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