How to take equity out of your home
Canadian homeowners hold significant equity in their homes. A home equity takeout lets you access that value without selling your property.
See how much I can access →How do you take equity out of your home in Canada?
To take equity out of your home, you either refinance your mortgage for a larger amount and take the difference as cash, open a home equity line of credit (HELOC) secured against your property, or add a second mortgage behind your existing one. All three are capped at a combined 80% loan-to-value, and all require re-qualifying, including the mortgage stress test.
Which one makes sense depends on how you'll use the money and how much penalty you'd pay to break your current mortgage. Use our calculators to estimate your available equity.
- You can typically access equity up to 80% of your home's appraised value, minus what you owe.
- The three main routes are a cash-out refinance, a HELOC, and a second mortgage.
- Each route has different costs, rate types, and penalty exposure.
80%
Max combined LTV
3
Ways to access equity
65+
Lenders compared
2–4 wks
Typical timeline
Worked example: how much equity can you access?
When your home increases in value — or as you pay down your mortgage — you build equity. An equity takeout lets you refinance your mortgage for a higher amount and receive the difference as cash, up to 80% of your home's current appraised value, minus what you still owe.
Example
Home value
$800,000
Current mortgage
$400,000
Available equity (80% LTV)
$240,000
Math: $800,000 × 80% = $640,000 maximum total borrowing. Subtract the existing $400,000 mortgage balance, leaving up to $240,000 in accessible equity, before refinance costs and any penalty for breaking your current term.
Refinance vs. HELOC vs. second mortgage
Cash-out refinance
Replaces your entire mortgage with a new, larger one at a fixed or variable rate. Best for a one-time lump sum need.
Penalty risk: yes, if mid-term
Rate: standard mortgage rate
HELOC
A revolving credit line secured against your home, added alongside your existing mortgage. Best for ongoing or uncertain needs.
Penalty risk: usually none
Rate: variable, prime-based
Second mortgage
A separate loan registered behind your first mortgage, often through a B-lender or private lender. Useful when a penalty or qualification issue rules out a refinance.
Penalty risk: none on your first mortgage
Rate: typically higher than A-lender rates
Costs and qualification
Expect a home appraisal ($300–$500), legal fees ($800–$1,500), and possibly a discharge fee if you're switching lenders. If you're breaking an existing fixed or variable term to refinance, add a prepayment penalty on top. You'll also need to pass the mortgage stress test on the full new amount, and lenders will review your income, credit, and existing debt (HELOCs, in particular, are usually structured so principal and interest amortize over the readvanceable portion).
Popular uses for equity takeout
Investment property
Use equity as a down payment on a rental or vacation property, subject to the lender's rules on using borrowed funds as a down payment.
Home renovations
Finance kitchen and bathroom renovations at mortgage rates instead of credit card rates.
Debt consolidation
Replace high-interest credit card and loan rates with your mortgage rate. See our full guide to debt consolidation.
Major purchases or education
Fund a child's education, start a business, or handle unexpected expenses at a lower interest rate than unsecured borrowing.
Frequently asked questions
Common questions Canadians ask about accessing home equity.
What is a home equity takeout?
A home equity takeout is when you refinance your mortgage for more than you currently owe and receive the difference as a lump sum of cash. You can typically access up to 80% of your home's appraised value, minus your remaining mortgage balance. It's commonly used for renovations, investment down payments, debt consolidation, or major expenses.
How do you take equity out of your home in Canada?
You take equity out by refinancing your existing mortgage through a bank, credit union, or broker-sourced lender, or by opening a home equity line of credit (HELOC) alongside your mortgage. Both require a home appraisal, and the combined total of your mortgage plus any new borrowing generally can't exceed 80% of your home's value. A refinance gives you a lump sum at a fixed or variable rate; a HELOC gives revolving access you draw as needed.
HELOC vs. refinance: which is better for accessing equity?
A cash-out refinance replaces your whole mortgage with a new, larger one at a fixed schedule, which suits a one-time need like a renovation or debt payoff. A HELOC is a revolving credit line secured against your home that you can draw and repay repeatedly, which suits ongoing or uncertain cash needs but usually carries a variable, prime-based rate. Refinancing may trigger a prepayment penalty if you're mid-term; a HELOC added on top of your existing mortgage typically doesn't.
Is a second mortgage the same as an equity takeout?
A second mortgage is one way to take out equity: it's a separate loan registered behind your existing mortgage, rather than replacing it. Second mortgages, often from B-lenders or private lenders, typically carry higher rates than a refinance or HELOC but can be useful if breaking your first mortgage would trigger a large penalty or you don't qualify with an A-lender.
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