Home Equity Loans in Ontario
A home equity loan turns part of the value you have already built into usable cash. In Ontario you can generally access up to 80% of your home's appraised value through a refinance or HELOC, and up to 85% through a second mortgage. The right route depends on your current rate, penalty and timeline.
Who this is for
- You want to consolidate high-interest debt into one lower payment.
- You are funding a renovation, a garden suite, or a long-overdue roof or furnace.
- You are helping a child with a down payment or covering tuition.
- You need working capital for a business and do not want an expensive business loan.
- You are settling a separation, an estate, or buying out a sibling.
- You have 20% or more equity and a clear plan for what the money is for.
How it works
- 1
We establish your available equity
Appraised value multiplied by 80% (refinance or HELOC) or up to 85% (second mortgage), minus what you still owe. That figure is your realistic ceiling, before qualifying.
- 2
We compare the three routes
Refinance the whole mortgage, add a HELOC behind it, or register a second mortgage. If your current rate is low and the penalty is large, a second mortgage or HELOC usually wins.
- 3
We price the penalty properly
Breaking a fixed mortgage early can cost an interest rate differential penalty of several thousand dollars. I calculate it before recommending anything, so the comparison is honest.
- 4
Application and appraisal
One application goes to the lender that fits, not a scattershot to five banks. An appraisal confirms value, usually within a week.
- 5
Approval and lawyer
Your lawyer registers the new charge and disburses the funds exactly as directed, paying creditors straight from the proceeds where that is the goal.
- 6
Review at renewal
We revisit the structure at renewal to make sure you are not paying alternative or private pricing longer than necessary.
What it costs
| Cost | Typical range | What it is |
|---|---|---|
| Broker fee (prime refinance or HELOC) | $0 | The lender compensates me on funding. You pay nothing for my time on an A-lender equity take-out. |
| Appraisal | $400 to $700 | Nearly always required on an equity take-out so the lender can confirm current value. |
| Legal fees and disbursements | $1,200 to $2,000 | Registering the new charge, title search and title insurance. Some lenders cover this on a straight switch. |
| Discharge fee | $275 to $400 | Charged by your existing lender when the old mortgage is discharged in Ontario. |
| Prepayment penalty | 3 months interest, or the IRD | Only if you break a fixed mortgage mid-term. Variable mortgages are usually three months of interest. |
| Private or second mortgage fees | 3% to 8% total | Lender plus broker fee, only where prime and near-prime options are not available. Disclosed in writing first. |
Full cost breakdown on every route is on the what it costs page, including how broker and lender fees actually work in Ontario.
Real numbers
Refinance to consolidate, mortgage up for renewal
- Home value
- $950,000
- Mortgage balance
- $480,000
- Maximum at 80% LTV
- $760,000
- Debt cleared
- $104,000
- Total monthly payments before / after
- $5,240 / $3,410
About $1,830 a month freed up, with no penalty because the refinance happened at renewal.
HELOC behind a 1.99% mortgage
- Home value
- $720,000
- First mortgage at 1.99%
- $310,000
- Penalty to break it
- $14,800
- HELOC approved
- $266,000 limit
- Drawn for renovation
- $90,000
The cheap first mortgage stays in place, the $14,800 penalty is avoided entirely, and interest is only paid on what is drawn.
Illustrative examples only. Your actual rate, payment and costs depend on your credit, income, property and the lender you qualify with.
FAQs
How much equity can I take out of my home in Ontario?
Up to 80% of the appraised value through a refinance or HELOC. A second mortgage with an alternative or private lender can reach 85%, sometimes higher in major centres.
What is the difference between a home equity loan and a HELOC?
A home equity loan is a lump sum with fixed payments and a set term. A HELOC is a revolving limit you draw from as needed, with interest-only payments on the balance drawn.
Do I need to requalify under the stress test?
For a prime lender refinance or HELOC, yes. Alternative and private lenders do not apply the federal stress test, which is why they can approve equity take-outs the bank declines.
Will taking equity out increase my payment?
Your mortgage payment rises because the balance is larger, but if the funds pay off credit cards and loans, total monthly outflow usually drops significantly. That is the number that matters.
Can I get a home equity loan with bad credit?
Often yes. Equity-based lenders look at the property first. Expect a higher rate and a lender fee, and a plan to move back to prime pricing within a year or two.
Is the interest tax deductible?
Only if the funds are used to earn income, such as investing or a business. Speak with your accountant before assuming a deduction applies.
How long does it take?
A prime refinance takes two to four weeks. A second mortgage can fund in five to ten business days, and faster when there is a deadline.