What Can You Use a Home Equity Loan For - 3 Other Worthy Things
March 9, 2020 | Posted by: Ron Chan
There’s hardly been a better time to tap into your home equity. Why? We discussed this in our recent article about who benefits from a Bank of Canada interest rate cut. And while most people consider home equity loans as a means to fund household renovations, to consolidate debt, or take advantage of an investment opportunity there are other worthy ways to invest this money. Some make sense right away, while others require a little explanation. Here they are.
3 Other Investments You Should Consider With a Home Equity Line of Credit
1. Education (Private School and Post Secondary)
Whether you want to send your adolescent to private school or near-to-recent high-school grad to university a home equity loan allows options you may not have had up until this point. This is indeed the most worthwhile investment you’ll ever make, because it’s in your own children. Just make sure your post-secondary student doesn’t major in philosophy or communications - the return on that investment isn’t so high.
Note: an investment in education may also apply to you. You may use the loan to seek a Masters or trade degree to improve and grow your career prospects and earning potential.
2. Starting Your Own Business
Next to investing in your own kids, the next best investment is YOU. Have you grown tired of being at the mercy of a boss or corporate entity that doesn’t know your name? If you want to control your own destiny by launching your own business a home equity loan can provide the capital you need. It doesn’t have to be some huge line of credit to cover the purchase of a commercial brick and mortar per se, as all you may require is enough to launch a website or buy equipment or vehicle to use in the course of your new business. Arm yourself with a strong business plan and get your ducks in a row - then seek the capital you need to execute your plan.
3. Home Furniture and/or Appliance Upgrades
This is somewhat within the realm of the aforementioned home renovations, but you may question it as an investment given that it does not increase the market value in the same way that a kitchen expansion or bathroom addition does. How can a new and great looking sofa set and dining room table (etc.) be considered an investment? When you place your home on the short term rental market. All over Canada (Winnipeg included) condominium and detached house owners alike are sprucing up their home interiors and conducting photo shoots to boost the aesthetics. This increases the visitor-to-booking conversion rate on both Airbnb and VRBO significantly. It doesn’t matter how nice a house or condo is on the surface, vacationers/guests will pay a premium to stay in short term rentals that look more inviting than competing properties. Even if you place your home on the STR market once every couple of months the home equity loan can quickly pay for itself with increased bookings. Plus, you get to enjoy it for the remaining days of the year!