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Can I use my home equity when dealing with life's unexpected events?

Yes, you can potentially use your home equity to deal with life's unexpected events, but it's important to carefully consider the implications and risks involved before doing so.


When you, and your loved ones, are dealing with life's unexpected events, money is usually an issue. 

Life events may include:

  • buying a home 

  • home renovations

  • having or adopting a child

  • paying for education

  • marriage, separation, or divorce

  • starting a business

  • supplementing retirement income

  • loss of employment

  • unexpected illness, injury, or disability

  • saving for a loved one with a disability

  • having enough money to pay for long-term care or home care

  • End-of-life care

  • death of a loved one.

Mortgage Broker in Barrie, Ontario.

Here are a few ways you might tap into your home equity during unexpected events:


Home Equity Line of Credit (HELOC) 

A HELOC works like a credit card where you have a line of credit to draw from as needed, and you only pay interest on the amount you've borrowed.


A mortgage is a loan that uses real estate as a security. You receive a lump sum of money and repay it over time with fixed monthly payments. Once that loan is paid off, the lender provides a discharge for that mortgage. 

Reverse Mortgage

A reverse mortgage is a loan that allows you to get money from your home equity without having to sell your home. This is sometimes called “equity release”. You may be able to borrow up to a certain percentage of the current value of your home. The maximum amount you will be able to borrow will depend on your age, your home’s appraised value and your lender.

You don’t need to make any payments on a reverse mortgage until the loan is due. This is usually when you move out of your home, sell it or the last borrower dies. You will owe more interest on a reverse mortgage the longer you go without making payments. This may result in you having less equity in your home.

Other Investments Vehicles:

  • Savings Accounts

  • Business or corporate assets

  • Equity in investment or rental properties

  • Life Income Funds

  • Life Insurance Policies

  • Locked-In Retirement Accounts

  • Registered Retirement Savings Accounts

  • Registered Retirement Income Funds

  • Tax-Free Savings Accounts

Before using your home equity, or your other investment vehicles, for unexpected events, consider the following:

Interest Rates and Fees 

Understand the interest rates and fees associated with the option you choose. Some options may have lower interest rates but higher closing costs, while others may have higher interest rates but lower upfront fees.


Repayment Terms

Make sure you understand how you'll be expected to repay the borrowed funds. Mortgages and HELOCs typically have fixed or variable interest rates and require monthly payments, while reverse mortgages may not require repayment until you sell the home or pass away.

Risk of Foreclosure:

Remember that using your home as collateral means you're putting it at risk. If you're unable to repay the loan, you could face foreclosure and lose your home.

Income Tax

Remember to always seek the advice of your financial advisor, a tax lawyer, or an accountant before using your other investment vehicles. Make sure you understand the tax consequences of using these assets.

Alternative Options

Explore government funding options for handling unexpected events.

Overall, using your home equity for unexpected events can be a viable option, but it's essential to weigh the pros and cons and make an informed decision based on your financial situation and needs.  

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