What is a Home Equity Loan?
A home equity loan allows Canadian homeowners to borrow against the value they’ve built in their property. It offers fast access to funds with fewer restrictions than traditional bank loans. Typically, you can borrow up to 80% of your home’s appraised value, minus any remaining mortgage balance.
As you pay down your mortgage or as your property value increases, your available equity — and your borrowing power — grows. Home equity financing provides a lump sum of cash that can be used for major expenses like renovations, debt consolidation, education costs, business investments, or life events.
It’s a flexible, affordable solution to unlock your home’s financial potential.
Benefits of Home Equity Loans
Discover how home equity loans can provide financial flexibility and help you achieve your goals.
Boost Your Credit Score
A home equity loan in Canada can be an effective way to rebuild or improve your credit. By making regular, on-time payments, you can strengthen your credit profile, increase your score over time, and qualify for better rates on future loans or mortgages.
Borrow More
With a home equity loan in Canada, you can access larger loan amounts compared to unsecured personal loans. Your borrowing power is based on your home’s appraised value and the equity you’ve built, giving you more flexibility and financial freedom.
Access to Equity
A home equity loan lets you tap into your property’s accumulated value without selling. It’s a simple way to access the money you’ve been building through mortgage payments and property appreciation, providing you with funds for life’s major expenses.
Lower Interest Rates
Since they’re secured by your property, home equity loans typically offer significantly lower interest rates compared to credit cards, personal loans, and other unsecured borrowing options, saving you thousands in interest costs over the life of the loan.
Flexible Repayment
Home equity loans come with flexible terms that can be tailored to your financial situation. Whether you need short-term funding or a longer repayment period to manage monthly payments, you can find options that match your budget and timeline.
Debt Consolidation
Use a home equity loan to consolidate high-interest debts like credit cards, personal loans, and other outstanding balances. By combining multiple payments into one lower-interest loan, you can simplify your finances and potentially save thousands in interest charges.
Home Equity Loan Options
At MortgageABS, we offer various home equity financing solutions tailored to your unique needs and financial goals.
- Fixed-Rate Home Equity Loans: Get a lump sum with predictable monthly payments.
- Home Equity Line of Credit (HELOC): Access funds as needed with flexible draw periods.
- Second Mortgages: Borrow against your equity while maintaining your existing first mortgage.
- Refinancing: Replace your current mortgage with a new one at a higher amount.
- Private Lending Options: Alternative solutions for those who don’t qualify with traditional lenders.
- Specialized Programs: Options for self-employed borrowers and those with credit challenges.
Our team of experts will guide you through the various options to find the right solution for your specific situation, ensuring you make the most of your home’s equity.
Home Equity Loan Resources
Explore these resources to learn more about home equity loans and how they can benefit you.
Home Equity Loans
Learn how home equity works and what lenders look for at the Financial Consumer Agency of Canada – Home Equity Loans and HELOCs
Renewal Calculator
When your mortgage term ends, it’s not just about renewing—it’s about re-evaluating.The Renewal / Switch Calculator helps Canadian homeowners make smarter choices by comparing renewal options against switching to a better rate or term.
Free Consultation
Schedule a complimentary consultation with me a self-employed mortgage specialists to discuss your unique situation and explore suitable financing options.
Frequently Asked Questions
Find answers to common questions about home equity loans.
Most lenders in Canada allow you to borrow up to 80% of your home’s appraised value, minus your outstanding mortgage balance. For example, if your home is worth $500,000 and you owe $200,000 on your mortgage, you could potentially access up to $200,000 in equity ($500,000 × 80% – $200,000 = $200,000).
Traditional lenders typically prefer credit scores of 650 or higher for home equity loans. However, private lenders and alternative financing options are available for those with credit challenges. At MortgageABS, we work with a wide range of lenders to find solutions regardless of your credit situation.
A home equity loan provides a one-time lump sum with fixed payments over a set term. A Home Equity Line of Credit (HELOC) is a revolving line of credit that you can draw from as needed, similar to a credit card. With a HELOC, you only pay interest on the amount you use, and you can borrow, repay, and borrow again during the draw period.
Yes, it’s possible to get a home equity loan with bad credit through alternative lenders and private financing options. While the interest rates may be higher than with traditional lenders, these loans can be a valuable tool for accessing needed funds and potentially rebuilding your credit. Our specialists can help you explore all available options.
You can use a home equity loan for virtually any purpose. Common uses include home renovations, debt consolidation, education expenses, medical bills, business investments, major purchases, emergency funds, and investment opportunities. Unlike some other loan types, there are generally no restrictions on how you can use the funds.
The timeline varies depending on the lender and your specific situation. With traditional lenders, the process typically takes 2-4 weeks from application to funding. Private lenders can often complete the process more quickly, sometimes in as little as 5-7 business days. Working with a mortgage broker like MortgageABS can help expedite the process.