How to Use Home Equity to Buy Your Next Property 

If you’ve built up equity in your current home, you may be sitting on one of the most powerful tools available for financing your next real estate purchase. Whether you’re considering upsizing, downsizing, investing, or purchasing a vacation home, leveraging your home equity could be a smart financial move. Here’s how to do it—and what to consider before getting started. 

What Is Home Equity? 

Home equity is the difference between your home’s current market value and the remaining balance on your mortgage. For example, if your home is worth $450,000 and you owe $250,000, you have $200,000 in equity. As you pay down your mortgage or as your home appreciates in value, your equity grows. 

You can access this equity in a few different ways to help fund the purchase of another property. 

3 Ways to Use Home Equity to Purchase a New Property

Home Equity Loan

A home equity loan allows you to borrow a lump sum against your available equity. This loan typically has a fixed interest rate and repayment schedule. 

Best for: Buyers who know exactly how much they need for a down payment or purchase
Considerations: You’ll carry two mortgage payments—your original mortgage and the home equity loan

Home Equity Line of Credit (HELOC)

A HELOC gives you access to a revolving line of credit based on your equity. You can draw from it as needed and repay over time, typically with a variable interest rate. 

Best for: Buyers who want flexibility or may need funds in stages (for example, for a property purchase and renovations)
Considerations: Payments can vary with interest rate changes, making budgeting more complex

Cash-Out Refinance

A cash-out refinance replaces your current mortgage with a new one that’s higher than what you currently owe. You receive the difference in cash, which can be used toward buying another property. 

Best for: Buyers who want to refinance and access equity at the same time
Considerations: This resets your mortgage terms and may result in a higher interest rate 

Is Using Home Equity Right for You? 

Using your home equity can be a financially sound strategy, especially since these loans often offer lower interest rates than personal loans or credit cards. However, since your home is the collateral, there are risks involved. It’s essential to assess your ability to manage additional debt and your long-term financial goals. 

Before making a move, make sure to: 

• Review your current home value and mortgage balance 

• Talk with a lender about your available equity and financing options 

• Consult a real estate professional to understand market conditions 

• Consider how your new monthly payments will affect your budget 

Why Florida Homeowners Are Using Equity in 2025 

Many homeowners across Central Florida are using home equity to: 

• Purchase a second or vacation home near major attractions 

• Invest in rental properties for passive income 

• Downsize and pocket the difference for retirement 

• Move closer to healthcare, family, or active adult communities 

• Upgrade to a more suitable home without liquidating other assets 

Let’s Talk About Your Next Move 

At RE/MAX Heritage, we work with homeowners every day who are ready to turn equity into opportunity. Whether you’re buying your next home, investing in a rental, or purchasing a seasonal getaway, we can guide you through every step of the process. 

Contact RE/MAX Heritage to learn how much equity you can access and how to use it to achieve your real estate goals. 

Stay Updated With Our Monthly New’s Letter: Register Now!