Home Equity Loans · Canada
Home Equity Loan: Turn Equity Into a Lump Sum
A home equity loan is a closed lump-sum loan secured by the equity in your home, repaid on a set schedule with regular payments. In Canada it is often called a second mortgage, or a homeowner loan when the amount is smaller. Because your property backs the borrowing, the rate is often lower than on unsecured debt.
- Product family Home Equity Loans
- Availability Canada-wide, licence-dependent
- Cost basis Lender-set, within federal limits
- Where it is regulated Federal ceiling + provincial rules
Equity is the gap between what your home is worth and what you still owe on it. A home equity loan lets you borrow against that gap and receive the money in one payment, rather than as a limit you draw on over time. You then repay it on a fixed schedule, much like any other instalment debt.
How a home equity loan works
You apply with a lender, the property is appraised, and the lender registers a charge against title behind your existing mortgage. That is why it is commonly described as a second mortgage. Because the loan is closed, the amount is advanced once and the terms are set at the start. If you repay it early, you generally cannot pull those funds back out unless you arrange a new borrowing.
What the lender looks at
The lender weighs the appraised value of the property, the remaining balance on your first mortgage, your income, and your other debts. How much you can access is capped by loan-to-value rules: at federally regulated lenders, a home equity line is generally limited to 65% of appraised value, with total secured lending usually capped at 80%, per OSFI Guideline B-20. Lenders also assess whether you can carry the new payment alongside everything else you owe, and the Financial Consumer Agency of Canada explains how mortgage qualification generally works.
Costs to expect
Beyond interest, there are usually one-time costs. These can include an appraisal or property valuation, a title search, registration of the charge, and legal or administrative fees. Some lenders bundle these into the loan; others bill them separately. Ask for a full written disclosure of the cost of borrowing before you commit, and compare it with what unsecured borrowing would cost you.
When a lump sum fits better
- You have a known, one-time expense such as a renovation or a large purchase.
- You want a predictable payment that does not change with interest rates.
- You plan to repay on a set schedule and do not need to redraw funds.
- You want a lower rate than unsecured options and can accept your home as security.
This route puts your home on the line if payments stop. That is a serious step, and it is worth talking through with a licensed professional before you commit. LoanGoose is a loan matching and comparison service, not a lender. The lowest rates are only available to the most qualified applicants.
What it costs
| Rule | Figure | What it means | Publisher |
|---|---|---|---|
| Home equity line of credit limit (federally regulated lender) | 65% of appraised value | Total secured lending against the property is usually capped at 80%. | Office of the Superintendent of Financial Institutions |
| Mortgage qualification — total debt service | about 44% | A stress-test rate above the contract rate is applied too (Guideline B-20). | Office of the Superintendent of Financial Institutions |
| Fixed-rate mortgage compounding | semi-annually | Required by Canadian law for fixed-rate mortgages. | Financial Consumer Agency of Canada |
No amount, term or rate is attached to any link on this page. Anything a lender offers you depends on your file and their own criteria.
What you need before you compare
- Your goal in one sentence. The amount, the date you need it, and the date you can repay it.
- Your real monthly surplus. What is genuinely left after every fixed cost — not what you hope is left.
- A current picture of your credit file. You can request a free copy of your report from each national bureau, and correcting an error is free.
- Every existing debt and its rate. Consolidation maths only works when you can see the whole board.
- The total cost of each option. Compare total repayment, not the headline rate.
- A check that the lender is licensed. Federally regulated banks fall under FCAC; provincial regulators license most other lenders.
Rules where you live
| Province or territory | Payday lending status | Local page |
|---|---|---|
| Newfoundland and Labrador | Licensed regime — federal cap applies | Home Equity Loans in Newfoundland and Labrador |
| Prince Edward Island | Licensed regime — federal cap applies | Home Equity Loans in Prince Edward Island |
| Nova Scotia | Licensed regime — federal cap applies | Home Equity Loans in Nova Scotia |
| New Brunswick | Licensed regime — federal cap applies | Home Equity Loans in New Brunswick |
| Quebec | Payday lending not licensed | Home Equity Loans in Quebec |
| Ontario | Licensed regime — federal cap applies | Home Equity Loans in Ontario |
| Manitoba | Licensed regime — federal cap applies | Home Equity Loans in Manitoba |
| Saskatchewan | Licensed regime — federal cap applies | Home Equity Loans in Saskatchewan |
| Alberta | Licensed regime — federal cap applies | Home Equity Loans in Alberta |
| British Columbia | Licensed regime — federal cap applies | Home Equity Loans in British Columbia |
| Yukon | Province-dependent | Home Equity Loans in Yukon |
| Northwest Territories | Province-dependent | Home Equity Loans in Northwest Territories |
| Nunavut | Province-dependent | Home Equity Loans in Nunavut |
Provincial rules change. Confirm the current position with the regulator before relying on it — see the sourced rules table.
Compare home equity loans options
This is a matching step, not an application with us — we are not a lender. Checking does not commit you to anything, and no amount, term or rate is promised here.
LoanGoose is a loan matching and comparison service, not a lender. We do not make loans, set rates or make credit decisions. We may earn a commission when you click or apply through our links. The lowest rates are only available to the most qualified applicants.
Questions people actually ask
What is a home equity loan?
It is a lump-sum loan secured against the equity in your home. You receive the money once and repay it on a set schedule. Because the property secures the debt, the rate is often lower than on unsecured borrowing.
How much can you borrow against home equity?
It depends on your appraised value, what you still owe, your income and your other debts. At federally regulated lenders, a home equity line of credit is generally limited to 65% of appraised value, with total secured lending usually capped at 80%, as set out in <a href="https://www.osfi-bsif.gc.ca/en/guidance/guidance-library/residential-mortgage-underwriting-practices-procedures-guideline-b-20">OSFI Guideline B-20</a>.
Is a home equity loan the same as a second mortgage?
In practice, yes. The new charge is registered behind your existing first mortgage, so the lender is second in line. That position carries more risk for the lender, which usually means a higher rate than your first mortgage.
What fees come with a home equity loan?
Expect an appraisal or valuation, a title search, registration of the charge on title, and possibly legal or administrative fees. Some lenders fold these into the loan. Ask for written disclosure of the full cost of borrowing before signing.
What happens if you cannot repay a home equity loan?
Because the loan is secured by your home, default can lead to the lender enforcing its charge, which may result in losing the property. That risk is why many people speak with a licensed professional before committing.
Can you get a home equity loan with less-than-perfect credit?
Sometimes, though the rate will usually be higher and the amount offered may be lower. The equity in your home does much of the work, but lenders still review income and debts. Compare a few offers before deciding.
Where to go next
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All loan types · Borrowing by province · Calculators
Sources for this page
- OSFI Guideline B-20 — residential mortgage underwriting —
- FCAC — debt and borrowing —
- FCAC — debt and borrowing —
Every figure on this page is attributed to the publisher above. Where a value could not be verified against the publisher's own publication, it is left out rather than estimated.