Thinking of tapping your home equity to step up into your next home?
It’s a timely strategy north of the border. With Canadian homeowners sitting on historically strong equity and shifting market dynamics, now may be a smart time to consider using that equity to move up. Below, you’ll find why the moment is favourable, how to assess your position, five practical strategies, and key pitfalls to avoid.
Why now is a good time to use home equity to move up
In Canada, homeowners have built significant value in their homes. For example:
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On average, Canadian homeowners had roughly 73 % equity in their home’s value (that is, the home is worth much more than what remains on the mortgage). NerdWallet+
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The average home value has risen notably — homes averaged around CAD $733,300 in May 2024.
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For many Canadian households, home equity represents between half and two-thirds of their total net worth.
What this means: if you’ve been holding property in Canada (and let’s say you’re in the Vancouver area — bonus points), the equity you’ve built can give you real purchasing power.
Assessing your home equity before you sell
Before you run head-first into a “move-up” plan, you’ll want to make sure the foundation is solid. Here’s how you check it:
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Determine the current market value of your home — get recent comparable sales (in your area like Kitsilano or Point Grey), or an appraisal.
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Subtract your remaining mortgage balance (and any other liens or home-equity lines of credit) from that market value. The remainder = your equity.
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Remember: while national or broad Canadian figures show strong equity, local markets vary — what your property in Vancouver has is not identical to other regions.
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With a clearer picture of your equity cushion, you’ll understand what you can realistically leverage — and what you might want to preserve.
Smart strategies for using your equity to move up
Here are five strategic levers to consider:
1. Choose timing carefully
Since you’re using your equity to move up, timing matters. Your strong equity position gives you flexibility — you might not feel rushed to accept a sub-optimal sale if you wait for the right next home. Especially in tighter supply markets, this buffer is meaningful.
2. Use your equity as a down payment on the next home
When you sell, you convert the equity you’ve built into a larger down payment on your next home. That can reduce your mortgage size, improve your borrowing terms, and allow you to aim for better features or location. In Vancouver’s premium market (where “luxury” for you is > $5 million), that extra cushion can matter.
3. Balance selling costs versus value uplift
Moving up usually means a larger purchase price, possibly higher property taxes (e.g., in Metro Vancouver), increased maintenance, and moving expenses. Having strong equity gives you a buffer, but you’ll still want to run the numbers: does the move truly add value or just add cost?
4. Evaluate tax, loan and financing implications
In Canada, you’ll want to think about: any capital‐gain implications (if the property isn’t your principal residence), closing costs, changes in mortgage interest rates, and the structure of your new financing. Especially now that rates aren’t as low as a few years ago. Accessing equity gives optionality—but you’ll want professional advice (tax, mortgage broker) to make sure it remains favourable.
5. Line up the sale and purchase in tandem
Ideally, your sale and your purchase should be coordinated. Being ready with pre-approved financing, having your next-home criteria set, and preparing for contingencies (temporary housing, bridging financing) are all smart. Because your equity position gives you leverage, you don’t want to be caught waiting without a plan.
Pitfalls and things to watch out for
Even with the wind at your back, there are risks:
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If your local market softens, your equity cushion could shrink. Strong national equity doesn’t guarantee every city or neighbourhood performs the same.
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The next home may come with higher financing costs or tighter borrowing conditions. Just because you have equity doesn’t mean you should stretch far beyond what your income and risk profile supports.
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Equity is only “realised” when you sell (or refinance). If you hold onto your current home without a clear plan, you may miss the opportunity to move up effectively.
Key takeaways
Using the equity in your home to move up is a powerful tool in the current Canadian market. With many homeowners holding strong equity positions, you may well be in a good spot to sell and upgrade. By focusing on these five strategic steps — timing your sale, leveraging your equity smartly, balancing costs, understanding implications, and coordinating your next purchase — you can approach the transition with confidence.
But remember: treat your equity as a tool, not a guarantee. Local market dynamics matter (especially here in British Columbia and the greater Vancouver area). With the right preparation and awareness, using home equity to move up can be a smart, forward-thinking step for sellers looking to take the next chapter.
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Using Home Equity to Move Up: Smart Strategies for Vancouver Sellers was provided by Regan Pyke, a Vancouver Realtor and a leader in the field of sales, marketing, and real estate investing. Regan can be reached via email at [email protected] or by phone at 778-228-2448.
