Using Your Home Equity Could Not Have Been Used For A More Special Purpose.

Mattias and Cybil had their mortgage coming up for renewal and contacted me in order to setup a time to complete a strategy session where we complete an in-depth evaluation of a customer’s needs now and in the future. After completing the session the result was the need to access and utilize equity from their home to pay off high-interest line of credit, complete some landscaping in their back yard and renovations inside their home.

In addition, they asked if they had enough equity so that it was possible to adopt a child! Out of the many years I have been in this line of work, never had home equity been used for such a special cause. This goes to show you that there are many reasons why a homeowner would access the equity in their home other the most common purposes.

Let’s take a closer look at the details…

BEFORE we made changes to their mortgage they were paying the following obligations:

  • Mortgage – $1,800/month with a rate of 3.75%, and an amount owing of $354,000
  • Unsecured Line of Credit – $80/month with a rate of 5.50%%, and an amount owing of $17,000

This ended up being a total monthly payment of $1,880 with an amount owing of $371,000.

AFTER the mortgage was re-configured with the following:

  • Mortgage – $354,000
  • Unsecured Line of Credit – $17,000
  • Home Renovations – $15,000
  • Landscaping – $10,000
  • Adoption allowance – $45,000

This ended up being a total mortgage of $441,000, which with a rate of 2.54% amortized over 30 year worked out to be a monthly obligation of $1,748.

In summary, Mattias and Cybil were able to access their home equity, which is one of the most underutilized assets by Canadian homeowners, to achieve the following goals:

  • Lower their overall borrowing rate
  • Keep their monthly obligation at an affordable level
  • Draw equity to pay off a higher interest debt (LOC)
  • Draw equity for the purpose of improving their property
  • Draw equity to adopt J

This BEFORE/AFTER result of this example is quite typical for the hundreds of homeowner’s I have helped over the years. It seems that as we go through life our plans and the obstacles we face can change for no apparent reason, and in many of these cases our mortgage will play a key role in how deal with these plans and obstacles.

Mattias & Cybil, all the best to you!


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