In Canada, the working limit for accessing home equity is 80% of the current appraised value of your property, minus what you still owe. The formula `(Appraised value × 0.80) − existing mortgage balance = accessible equity` Example — Mississauga detached home Appraised value: $1,100,000 Existing mortgage: $560,000 Maximum borrowing: $1,100,000 × 0.80 = $880,000 Accessible equity: $880,000 − $560,000 = $320,000 That is the ceiling, not an approval. You still have to qualify for the payment on the new total under the stress test at the greater of 5.25% or contract rate plus 2%. Three ways to access it 1. Refinance. Replace the existing mortgage with a larger one. Best rate of the three, single payment, requires legal work and triggers a prepayment penalty if you break mid-term. 2. HELOC. A revolving line secured against the home, capped at 65% of value on its own (the combined mortgage plus HELOC still cannot exceed 80%). Priced at prime plus a spread, interest-only payments allowed, and you only pay on what you draw — ideal for staged renovations. 3. Second mortgage. A separate charge behind your first. Higher rate and lender or broker fees, but it leaves a low first-mortgage rate untouched and avoids a large prepayment penalty. Usually a short-term tool. What it costs Appraisal: $300–$500 Legal / title: $800–$1,500 on a refinance Discharge fee: $250–$400 if you leave your current lender Prepayment penalty: three months' interest on a variable; the greater of three months' interest or the IRD on a fixed — get the figure in writing before you commit Lender or broker fee: typically 1%+ on B-lender and private second mortgages Rentals and second properties Investment properties are generally also capped at 80% loan-to-value, priced above owner-occupied rates. Some lenders cut rental refinances to 75%. If you are pulling equity to buy an investment property, keep the borrowed funds traceable — interest on money borrowed to earn income is generally deductible under CRA rules, and commingled accounts destroy the paper trail. Should you? Equity is cheap money compared with credit cards at 19–22%, and consolidating high-interest debt into a mortgage can free hundreds of dollars a month. The trade-off is that the balance is now secured against your home and amortized over decades. Borrow for things that build value or cut a higher interest cost, and pair a consolidation with a plan to stop re-accumulating the debt. Model the outcome with our refinance calculator and debt consolidation calculator. Ready to Get Started? Contact us today for personalized mortgage advice and competitive rates. Get Pre-Approved Call (416) 822-7357 Frequently Asked Questions Should you? Equity is cheap money compared with credit cards at 19–22%, and consolidating high-interest debt into a mortgage can free hundreds of dollars a month. The trade-off is that the balance is now secured against your home and amortized over decades. Borrow for things that build value or cut a higher interest cost, and pair a consolidation with a plan to stop re-accumulating the debt. Model the outcome with our refinance calculator and debt consolidation calculator. Can I access more than 80% of my home value? Not with conventional lenders. A small number of private lenders will go past 80%, at materially higher rates and fees. Reverse mortgages are a separate product for homeowners 55 and older with their own limits. Do I need an appraisal to take out equity? Usually yes. Some lenders accept an automated valuation on straightforward urban properties, which saves the $300–$500 fee. Does taking out equity require the stress test? Yes. Any increase in your loan amount is qualified at the greater of 5.25% or your contract rate plus 2% at federally regulated lenders. Is a HELOC or refinance cheaper? A refinance almost always carries the lower rate. A HELOC costs more per dollar but you only pay interest on what you draw, so for staged spending the total interest can be lower.
