How does a home equity loan work in Canada, and how much can you borrow?
The four ways to borrow against your home, what each costs in 2026, and what to do when the bank says no.
Written and reviewed by Asim Ali, Mortgage BrokerUpdated 5 November 2026
Licensed: BCFSA (BC) · RECA (Alberta) · FSRA (Ontario) · check our licences
A home equity loan lets you borrow against the part of your home you own outright. In Canada it comes in four forms: a HELOC, a refinance, a second mortgage or a reverse mortgage. Banks lend up to 80% of your home's value in total, and a HELOC's revolving part is capped at 65%. If you qualify, a bank HELOC is usually the cheapest. It is priced at prime (4.70% at RBC and TD since 29 October 2026) plus a margin set by the bank. If the bank says no, a private second mortgage lends to 80% combined in big cities at 9.49-14.99% interest-only, and funds in 5-12 business days.
What are the four ways to borrow against your home in Canada?
Each one fits a different person. Tap each option to see who it suits, what it costs and how fast it is.
HELOC: a line of credit secured on your home
Borrow, repay and borrow again, up to 65% of your home's value, as long as your mortgage plus the HELOC stays under 80%. You pay interest only on what you use, at prime (4.70%) plus the bank's margin. You need bank-level income, a passing stress test and usually a credit score above 680.
Compare all fourCheck my optionsRefinance: replace your mortgage with a bigger one
A new first mortgage up to 80% of value, with the extra cash paid to you. A cash-out refinance can't be insured, so you must keep at least 20% equity. Bank rates are the lowest, but you may pay a penalty to break your current mortgage, and you must pass the stress test. A B-lender refinance at 6-8.5% works when the bank says no but your credit is fair.
B-lender refinanceCheck my optionsSecond mortgage: a separate loan behind your first
Your current mortgage stays as it is. The second costs more, 9.49-14.99% interest-only, but only on the new money. Private lenders look at equity more than credit, and fund in 5-12 business days. It is a 12-24 month tool with a plan to refinance out.
How second mortgages workCheck my optionsReverse mortgage: for owners 55 and older
Borrow up to 55% of your home's value with no monthly payments and no income test. The loan is repaid when you sell or move. Fixed rates ran 6.28-7.59% in October 2026. Interest adds to the balance, so the debt grows over time.
Reverse vs private mortgageCheck my optionsHow much equity can you borrow?
Lenders take your home's appraised value, multiply it by their limit, then subtract what you owe. The limit is usually 80% in big cities, 75% in mid-size cities, and 65% or less on rural property and acreages. Move the sliders to try your own numbers.
You could borrow up to
- Combined loan-to-value
- Likely second-mortgage rate
- Interest-only payment
- Equity you keep
Estimate only, as of November 2026. Lenders use the appraised value, not the assessment. Fees come off the advance.
Example: a home worth $900,000 with $450,000 owing. At 80%, the most anyone will lend in total is $720,000. Take away the $450,000 you owe and up to $270,000 is available. At 75% it is $225,000.
Which option fits you best?
| HELOC | Bank refinance | Private second | Reverse mortgage | |
|---|---|---|---|---|
| Most you can borrow | 65% revolving, 80% in total | 80% of value | 80% combined in big cities, 65-75% elsewhere | Up to 55% of value |
| Rate, November 2026 | Prime (4.70%) plus a bank margin | Bank 5-year fixed rates | 9.49-14.99%, interest-only | 6.28-7.59% fixed (Oct 2026) |
| Income and credit check | Full, with stress test | Full, with stress test | Light. Equity and exit matter most | None. Age 55+ |
| Time to money | 2-4 weeks | 3-6 weeks | 5-12 business days | 2-4 weeks |
| Fees | Legal and appraisal, often covered | Penalty to break your mortgage | Lender fee 2-3% plus broker fee 1-2% | Set-up and legal costs |
| Best for | Good credit, steady income | Large amounts at the lowest rate | Fast cash, bruised credit, or a cheap first you want to keep | Retired, low income, staying put |
Typical ranges for files we see, not offers. Your own rate and fees come in writing before you commit.
Can you get a home equity loan with bad credit?
Yes, but usually not from a bank. A bank HELOC needs a strong score and provable income. With a score under 600, a consumer proposal, CRA arrears or income the bank won't count, you have two routes:
- B-lender refinance at 6-8.5%, if your score is near 600 and you have about 20% equity. It takes 2-3 weeks. B-lender mortgages.
- Private second mortgage at 9.49-14.99%, if you need the money fast or the B-lender says no. Lenders care about your equity and your plan to pay them back. Bad credit private mortgages.
What does a private home equity loan really cost?
The rate is only part of it. Here is a $100,000 private second mortgage at 11.99% for 12 months, interest-only:
Fees: 2% lender, 1.5% broker, $1,800 legal, $450 appraisal. Interest $11,990 plus fees $5,750 = $17,740 for the year. Run your own numbers.
That is why a private second only makes sense for a short time, with a clear way out. If the same money can wait three weeks and you qualify with a B-lender, it is usually cheaper.
What do people use a home equity loan for?
Paying off high-interest debt
Credit cards at 21% rolled into one payment. Works only with a plan to clear it. Debt consolidation.
Clearing a CRA debt
The lawyer pays CRA at funding and the lien comes off title. CRA tax debt.
Renovating before a sale
Fix the kitchen, sell for more, pay the loan out of the sale. Construction and renovation.
Buying out a spouse
Keep the home and your low-rate first mortgage. Spousal buyout.
A down payment on another property
Close fast, then refinance the new home with a bank. Bridge loans.
Stopping a foreclosure
Pay the arrears and costs inside the legal window. Stop foreclosure.
How do you apply for a home equity loan through us?
Home value, what you owe and what you need. Two minutes on the form or one phone call.
Bank HELOC, B-lender and private, side by side, in dollars.
Lender named, rate, fees and APR. Usually 1-2 business days for private.
Money in 5-12 business days, with your exit plan in writing.
When is a home equity loan a bad idea?
- When it only buys time. If the payment is already too high and nothing will change in 12 months, borrowing more makes the hole deeper. Selling on your own terms can leave you with more.
- When you would run the cards back up. Consolidation works only if the cards stay paid off.
- When a cheaper option is weeks away. If a bank or B-lender can say yes in three weeks and you can wait, wait.
- When the equity is thin. Above 80% combined almost no lender will fund, and fees eat a small loan.
Where can you get a home equity loan through us?
Anywhere in BC, Alberta and Ontario. Limits and rates differ by province and city. Pick your city for local rates, limits and rules.
Home equity loan questions
Is a home equity loan the same as a HELOC?
Not quite. A HELOC is a line of credit you can draw and repay. A home equity loan usually means a lump sum, such as a second mortgage or a refinance. In Canada people use the words loosely, so ask which one you are being offered.
How much equity do I need for a home equity loan?
Banks and most private lenders want at least 20% left in the home after the loan. So your mortgage plus the new loan must stay under 80% of the home's value in a big city, and lower in smaller places.
Do I need a job to get a home equity loan?
For a bank HELOC or refinance, yes: you must prove income. For a private second, lenders care most about equity and a believable way to repay, such as a sale, a refinance or a pension. For owners 55+, a reverse mortgage needs no income at all.
Will a second mortgage affect my first mortgage?
Your first mortgage stays the same. Your first lender will see the second on title. Some bank "collateral charge" mortgages can block or limit a second, so we check your registration before promising anything.
How fast can I get a home equity loan?
A private second can fund in 5-12 business days. A B-lender refinance takes 2-3 weeks. A bank HELOC or refinance often takes 3-6 weeks.
Sources. OSFI Guideline B-20, residential mortgage underwriting (HELOC 65% / 80% limits) · RBC and TD prime rate 4.70%, effective 29 October 2026 · Bank of Canada policy rate 2.50% (28 October 2026) · Bank Act s. 418 (80% limit) · reverse mortgage rates as published by lenders, October 2026 · private and B-lender rates from files we placed, November 2026.
Talk it through with a licensed broker before you decide
Tell us what is going on in a few lines. We call you back the same day with what lenders will say, what it costs in dollars, and how you get back to a bank. If private is the wrong tool, we say so.
- Your full cost, in dollars, before you commit
- The lender named on your commitment letter
- A written plan to exit within 12-24 months
Asim Ali, Mortgage BrokerSurrey office · BC, Alberta and Ontario
Tell us three things. A licensed broker calls you today.
No credit check. No ID. No date of birth. We ask what a lender decides on: the property, the equity and the deadline.
- 1Same-day call from Asim Ali or a licensed colleague
- 2A range for rate, fees and APR on the call
- 3Written commitment in 1-2 business days if you go ahead
- 4Nothing to pay until the mortgage funds
Asim Ali, Mortgage Broker
Licensed in BC, Alberta and Ontario · (604) 591-3590