Understanding Equity: How Alberta Homeowners Build Wealth Over Time

Renee Huse, founder of Spire Mortgage Team in Alberta, has had countless kitchen-table conversations with clients asking one simple but important question: “How does owning a home actually build wealth?”

It’s a great question — especially when it feels like home prices are high, mortgage payments are intense, and life keeps getting more expensive. The truth is, equity doesn’t build overnight. But it does build — and over time, it becomes one of the most powerful tools we have to create security, opportunity, and freedom.

Let’s unpack what equity really is, how it grows, and how you can use it as a stepping stone — not just a number on paper.

What We’ll Cover:

• What Is Home Equity?
• Two Ways Equity Grows Over Time
• Real Alberta Case Study: Buying in Airdrie with 5% Down
• Equity in Alberta’s Market: Risks and Realities
• How Much Equity Do You Need to Refinance in Alberta?
• When Can You Use Your Equity?
• Glossary: Key Equity Terms
• FAQs About Home Equity

What Is Home Equity?

Equity is the difference between what your home is worth and what you still owe on your mortgage.

Let’s say your home in Red Deer is worth $500,000 and you still owe $360,000 on your mortgage. That means you have $140,000 in home equity.

It’s your stake in the property. And it grows in two key ways: every time you pay down your mortgage, and every time your home increases in value.

Two Ways Equity Grows Over Time

1. Mortgage Paydown

Every mortgage payment you make chips away at your loan. In the beginning, most of your payment goes toward interest — but gradually, more goes toward the principal. That principal paydown builds equity.

For example, if you’ve owned your Calgary home for 5 years and paid down $80,000 in principal, that’s $80K in equity built — just by staying the course.

2. Home Price Appreciation

If the value of your home goes up, so does your equity — even if your mortgage hasn’t changed. Alberta’s real estate market moves in cycles, but historically, values trend upward over the long term.

If your Edmonton home was worth $400,000 when you bought it and it’s now worth $480,000, that’s $80,000 more equity you didn’t have to lift a finger to earn.

Real Alberta Case Study: Buying in Airdrie with 5% Down

In 2020, a young couple bought a starter home in Airdrie for $390,000 with just 5% down.

Their Mortgage at Purchase:

• Down payment: $19,500
• Mortgage (insured): $386,000
• Interest rate: 2.29% fixed
• Monthly payment: ~$1,678

They were nervous about buying at “the peak,” and wondered if they should wait. But they had stable jobs, strong credit, and a baby on the way — they wanted security.

Fast forward to 2025, and their home is now worth $465,000.

They’ve also paid down over $50,000 in principal. So here’s what their equity looks like today:

Home Value (2025)	Mortgage Balance	Total Equity
$465,000	$336,000	$129,000

They’ve built $129,000 in equity in just 5 years — on a $19,500 down payment. And they didn’t have to speculate, flip, or chase investments. They simply lived in their home and made their payments.

Equity in Alberta’s Market: Risks and Realities

Let’s be honest — equity isn’t guaranteed. The real estate market moves in cycles, and yes, values can go down. We saw that in parts of Alberta during the oil downturn, and we’ve seen it more recently with interest rate spikes that cooled buyer demand.

But here’s what matters: if you buy a home you can afford, make your payments consistently, and stay in it for the long term, temporary price dips don’t affect your equity in a meaningful way.

Equity isn’t about flipping or short-term gains — it’s about stability. If you’re planning to own your home for 5, 10, or 20 years, you’re in a position to ride out market shifts and let time do the heavy lifting.

We always remind our clients: your home is a place to live first, an investment second. But when approached strategically, it can do both — and equity is the bridge.

How Much Equity Do You Need to Refinance in Alberta?

To refinance your home and access your equity, most lenders require you to retain at least 20% equity in the property after the refinance. That means you can borrow up to 80% of the home’s appraised value.

Let’s look at an example using a home in Grande Prairie:

• Appraised value: $475,000
• 80% of that value: $380,000
• Existing mortgage: $312,000
• Equity available to access: $68,000

You could refinance up to $380,000, which means you might pull out $68,000 tax-free — and still keep 20% equity in your home.

Keep in mind:

• You’ll need to qualify under current stress test rules.
• You may face penalties if you break your mortgage early.
• If you’re self-employed, we might need to explore Alt-A lenders who allow different forms of income verification — often at slightly higher rates (typically around 5.49%).

Our role is to run the numbers and show you the full picture — including new payments, closing costs, and long-term impact — so you can decide if refinancing makes sense for your goals.

When Can You Use Your Equity?

You don’t have to sell your home to tap into your equity. Many of our Alberta clients use a refinance or home equity line of credit (HELOC) to access funds for things like:

• Renovations or upgrades
• Buying a second property
• Paying off high-interest debt
• Helping kids with school or their own down payment

Keep in mind: you’ll need enough equity (usually at least 20%) and you’ll have to qualify based on income and credit. Learn more about mortgage refinancing in Alberta.

Glossary: Key Equity Terms

• Equity – The difference between your home’s market value and what you owe on it.
• Principal – The original amount you borrowed (not including interest).
• Appreciation – An increase in your home’s value over time.
• Refinance – Replacing your existing mortgage with a new one, often to access equity or get a better rate.
• HELOC (Home Equity Line of Credit) – A revolving line of credit secured by your home’s equity.
• Loan-to-Value (LTV) – A ratio that compares your mortgage balance to your home’s value. Lower LTV = more equity.
• Amortization – The length of time it takes to pay off your mortgage in full (usually 25 or 30 years in Canada).

FAQs About Home Equity

How long does it take to build equity in Alberta?

It depends on your down payment, interest rate, and market growth — but even with 5% down, many Alberta homeowners see real equity gains within 3–5 years.

Can I use equity to buy a rental property?

Yes, as long as you qualify. Many of our investor clients in Edmonton and Calgary use a refinance strategy to unlock equity for a down payment on a second home. Learn how rental property financing works in Alberta.

What’s better: HELOC or refinance?

A HELOC offers flexibility, but a refinance may give you a lower fixed rate. It depends on your goals — we’ll walk you through both.

Is equity guaranteed to grow?

No. Home values can fluctuate. But over the long term, Alberta real estate has proven to be a solid way to build wealth.

Will using equity affect my mortgage payments?

Yes. If you refinance to access equity, your mortgage balance will increase — and so will your payment. We’ll help you understand the full cash flow impact before you decide.

Call-to-Action

Give us a call or fill out an application at this link: https://spiremortgage.ca/apply-now and our team will get in touch with you to start building a plan that suits you.

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Written by the Spire Mortgage Team, Alberta’s strategic mortgage planning experts.
Learn more: https://spiremortgage.ca