Your Year-End Home Equity Checkup

As the year winds down and you begin planning your financial goals for 2026, there’s one asset worth revisiting before the clock strikes midnight: your home equity. Many homeowners think of home equity only when they’re buying or selling, but conducting a year-end home equity checkup can unlock strategic advantages, whether you’re planning renovations, considering a move, or simply safeguarding your long-term financial stability.

What Is Home Equity, and Why Review It at Year-End?

Home equity is the portion of your property you truly own, the difference between your home’s current market value and the remaining balance that you still owe on your mortgage. Home equity generally represents your largest financial asset, but is often overlooked until a major life event triggers attention.

Conducting a checkup at the end of the year offers several advantages:

Property Values Shift Over Time

Real estate markets aren’t static. Prices may rise due to demand, fall due to economic shifts, or fluctuate seasonally. A home that was worth $750,000 in January might be worth $790,000 or $730,000 today.

A year-end check helps you capture the most up-to-date snapshot of your home’s market value. Knowing where your equity stands can help you make informed financial decisions in the new year.

Mortgage Balances Decrease

Every mortgage payment chips away at your principal. Even if rates have been higher in the past couple of years, you’ve likely built at least some equity through regular payments.

Over 12 months, that progress adds up, and it’s worth quantifying.

Equity Plays a Major Role in Future Financial Plans

Whether you’re planning renovations, starting investments, upgrading homes, or preparing for retirement, home equity affects your options more than almost any other factor.

A year-end check ensures you step into 2026 with a clear understanding of your financial foundation.

How to Calculate Your Current Home Equity

Your year-end equity calculation doesn’t need to be complicated. Use these steps:

Step 1: Determine Your Home’s Estimated Market Value

There are a few ways to do this:

• Reviewing recent real estate listings in your neighbourhood  can give you a realistic sense of current pricing trends and buyer demand.
• Check market reports for your local area.
• Request a Comparative Market Analysis (CMA) for the most accurate estimate.
• Use online tools, which can offer a ballpark figure but often lack nuances.

Step 2: Look Up Your Remaining Mortgage Balance

Check your latest mortgage statement. If you have a home equity line of credit (HELOC), include that balance as well.

Step 3: Subtract What You Owe From Your Home’s Value

Home value – mortgage/HELOC balance = your current equity

Understanding Your Equity Position: Why It Matters for 2026

Once you’ve completed the calculation, the next step is interpreting what it means for your upcoming plans. Your equity position can shape financial, lifestyle, and real estate decisions in the year ahead.

Here are the key scenarios and what they mean for your 2026 goals.

If You’re Planning to Renovate in 2026

Renovations are one of the biggest reasons homeowners check their equity. A strong equity position can help you:

Leverage a HELOC or Refinance

If you have substantial equity, typically at least 20% ownership, you may have access to more favourable borrowing options. HELOC interest rates are often lower than those of credit cards or personal loans, and they allow you to borrow only what you need.

Prioritize High-ROI Projects

Knowing your current equity helps you determine how much you can safely invest and aligns renovation choices with future home value goals. In 2025, kitchen updates, energy-efficient improvements, and bathroom remodels continue to offer strong ROI.

Avoid Overleveraging

If equity is tight, you may want to phase projects or delay major renovations until your equity grows. A year-end assessment helps you calibrate those timelines.

If You’re Considering Selling in 2026

Whether you’re moving up, downsizing, or relocating, understanding your equity helps determine what you can afford as a buyer in today’s market. Reviewing the home buying process early can help you plan your next move with confidence.

High Equity: You Have Flexibility

If your home is worth significantly more than your mortgage balance, you have options:

• Move up to a larger home
• Downsize for retirement or lifestyle changes
• Relocate to a new city or province
• Access funds for a second property or investment

A year-end check helps you estimate how much you’d walk away with after selling, which is essential for budgeting your next steps.

Lower Equity: More Strategic Timing Required

If home values in your neighbourhood have softened or you purchased recently, your equity may be on the lower side. That doesn’t prevent a 2026 sale, but it may influence strategy:

• Adjusting timing to give the market time to strengthen
• Making minor, cost-effective improvements to boost value
• Running net sheets with your realtor to understand true costs

Your year-end check provides you with the clarity to make a solid plan instead of guessing.

If You’re Thinking About Buying an Investment Property

Investors often leverage their home equity to build wealth. A year-end check helps you determine if this is feasible and financially responsible.

Using Equity as a Down Payment

You can refinance or use a HELOC to pull equity for a down payment on a rental property. Lenders typically allow you to borrow up to 80% of your home’s value, depending on income and debt ratios.

Assessing Your Debt Load

Equity alone doesn’t dictate readiness; monthly payment capacity also matters. Knowing your year-end equity is the first step in building a realistic investing budget for 2026.

Understanding Market Trends

With the 2025–2026 market forecast expecting continued rental demand in many Canadian cities, understanding your equity position now could open new opportunities sooner than you expected.

If You’re Preparing for Retirement

Your home is a cornerstone of long-term financial planning. Even if retirement is far away, this year-end check helps you understand how your home supports your future.

Building Long-Term Stability

More equity generally means greater financial security later in life. Tracking your equity year over year helps you see whether you’re on the trajectory you want.

Considering Downsizing?

If downsizing within the next 5–10 years is something you’ve entertained, knowing your current equity can help you project what you might net from the sale and how that aligns with future housing needs.

Exploring Reverse Mortgage Options

While not for everyone, reverse mortgages rely heavily on high equity. Reviewing your current numbers helps you understand whether these options might be worth exploring down the road.

Your home equity is a powerful tool. Knowledge is the first step toward empowered decision-making. A year-end checkup equips you with the clarity and confidence to approach 2026 with intention, contact us so that you can make informed decisions that protect your long-term financial stability.