Looking to Borrow Against Your Home in Ontario?

360Lending is an award-winning mortgage brokerage based in Richmond Hill, Ontario. Over 2,000 homeowners in Ontario have given us 5-star reviews and we have an A+ rating from the Better Business Bureau.

We help homeowners get the lowest rates for home equity loans, home equity lines of credit, refinancing, and other mortgage products.

To explore your borrowing options, click here to schedule a call with our team.

Owning a home in Ontario gives you more than just a roof over your head. It also gives you access to one of the most powerful financial tools available: using your house as collateral to borrow money.

If you need to pay off debts, fund a renovation, cover tuition, invest in a business, or even handle unexpected expenses, tapping into your home’s value can be a smart way to borrow at much lower interest rates compared to credit cards or personal loans.

What Does “Using Your House as Collateral” Mean?

When you use your house as collateral, you're offering it as security for the lender.

If you repay the loan as agreed, everything is fine.

But if you don't, the lender could take action to recover the money by selling your home (through foreclosure or a power of sale).

Because this gives lenders strong protection, they usually offer lower interest rates when you secure a loan with your house compared to unsecured loans.

In Ontario, it's a very common and accepted practice — but it’s still a serious decision because your home is at risk if you can't make payments.

What Types of Loans Use Your Home as Collateral?

There are several ways to borrow against your home in Ontario. Each one works a little differently.

1. Home Equity Loan (Second Mortgage)

If you don’t want to touch your first mortgage (especially if it has a good rate), you can take out a second mortgage.

A home equity loan gives you a lump sum of money, secured against your home's value, but it sits behind your first mortgage.

You’ll have two separate payments: one for your original mortgage and one for the second mortgage.

Interest rates for second mortgages are higher than first mortgages, but still much lower than unsecured borrowing like credit cards.

2. Home Equity Line of Credit (HELOC)

A HELOC works like a credit card, but it's secured by your home.

You’re approved for a certain limit (based on your home’s value).

You can borrow, repay, and borrow again whenever you want, as long as you don’t exceed the limit.

You usually only pay interest on the amount you've borrowed, not the full limit.

HELOCs are very popular in Ontario because they offer flexible access to cash without having to refinance your entire mortgage.

3. Mortgage Refinancing

If you already have a mortgage, you can refinance it to borrow additional money.

This usually means replacing your current mortgage with a new one that’s larger, and you get the difference in cash.

Current mortgage balance: $200,000

Home value: $500,000

New mortgage after refinancing: $300,000

Cash you receive: $100,000

Refinancing typically offers the lowest interest rates because it’s structured like a new traditional mortgage.

4. Reverse Mortgage

Available for Ontario homeowners aged 55 and older, a reverse mortgage lets you borrow against your home’s value without having to make monthly payments.

The loan gets repaid when you sell the home, move out permanently, or pass away.

It’s a unique option for seniors who are "house-rich but cash-poor" and need to access their equity without selling their home.

How Much Can You Borrow Using Your Home?

In Ontario, the general rule is:

You can usually borrow up to 80% of your home's appraised value, minus any existing mortgage balance.

Here’s a simple formula:

(Appraised Home Value × 80%) – Current Mortgage Balance = Maximum New Loan Amount

Home appraised at $600,000

Existing mortgage balance: $250,000

80% of home value = $480,000

Maximum you could borrow = $480,000 – $250,000 = $230,000

If you need more than that, private lenders may allow you to borrow up to 85% or even 90%, but expect to pay higher interest rates.

What Do You Need to Qualify?

Each type of loan has its own rules, but in general, lenders will look at:

Your home’s current market value: An appraisal may be required.

Your mortgage balance: Less owed = more borrowing room.

Your income and ability to repay: Especially important for refinancing, HELOCs, and home equity loans.

Your credit score: Better credit = better rates, but there are options even for bad credit.

Your debt-to-income ratio: How much you owe compared to how much you earn monthly.

Some private lenders and second mortgage providers may be more flexible and base approvals mostly on the property value itself, not your income or credit.

Benefits of Using Your Home as Collateral

Lower interest rates compared to personal loans or credit cards

Access to large amounts of money (especially if you have high home equity)

Flexible options depending on your needs (lump sum, credit line, refinancing)

May be tax-deductible (interest may be deductible if the funds are used for investment or business purposes — always check with an accountant)

Risks of Using Your Home as Collateral

Foreclosure risk: If you can’t make payments, you could lose your home.

Market risk: If property values drop, you could end up owing more than your home is worth (known as being "underwater").

Fees and closing costs: Appraisals, legal fees, and administration costs can add up.

Higher total debt: Borrowing more against your home increases your overall liabilities.

It’s essential to be realistic about your ability to repay and only borrow what you truly need.

How to Use Your House as Collateral for a Loan

Step 1: Understand Your Home’s Value

Before applying for any loan, you need a good idea of what your home is worth.

An experienced mortgage broker can often help you estimate this based on recent sales in your neighborhood. If needed, they can also arrange a professional appraisal, which most lenders will require.

An appraisal typically costs about $400–$600 in Ontario, but it’s a crucial step to accessing your equity.

Step 2: Review Your Mortgage and Equity Position

You’ll also need to know how much you currently owe on your mortgage.

A broker will help you calculate how much usable equity you have — and how much you can safely borrow without putting yourself at risk.

Equity formula:

(Current Home Value × 80%) – Current Mortgage Balance = Maximum Borrowing Amount

Step 3: Choose the Best Loan Type

This is where having a reputable mortgage broker really shines.

Instead of you trying to guess which product is right — refinancing, a second mortgage, a HELOC, or even a reverse mortgage — your broker will review your needs and financial situation and match you with the best solution.

Different lenders have different rules, rates, and fees. A broker navigates this for you and negotiates on your behalf.

Step 4: Apply and Get Approved

A mortgage broker will package your application properly to increase your chances of approval.

They'll also gather required documents like:

Income proof

Home insurance details

Mortgage statements

Property tax information

And they'll help you address any credit issues, if needed, before submitting the file to lenders.

Step 5: Closing the Loan

Once approved, your broker coordinates the final steps, including:

Arranging legal representation

Registering the new loan or mortgage on title

Reviewing closing costs and making sure you understand all fees

This support prevents last-minute surprises and ensures you get the funds quickly and safely.

Reasons to Borrow Using Your House as Collateral

1. Debt Consolidation

Many homeowners use home equity to pay off:

High-interest credit cards

Personal loans

Car loans

Lines of credit

This often cuts monthly payments dramatically and reduces interest costs.

2. Home Renovations

Borrowing against your home to fund upgrades like a new kitchen, finished basement, or new roof is very common.

Some improvements (like adding a second unit or energy-efficient upgrades) can increase your home’s value more than the renovation cost!

3. Funding a Business or Investment

Some homeowners tap into equity to:

Start or grow a small business

Invest in rental properties

Purchase stocks or other investments

Be cautious with this — using your home for risky investments can be dangerous if things don’t go as planned.

4. Living Expenses or Helping Family

Using your home’s equity to help your children with a down payment on their first home or to cover university tuition is becoming increasingly common in Ontario.

Just make sure you still leave yourself enough financial breathing room!

Using Your House as Collateral for a Loan in Ontario

Using your home as collateral is a powerful financial tool, but it’s not something you want to do casually.

Your home is your greatest asset — and possibly your family's security for generations.

Working with a professional, trustworthy mortgage broker ensures you make smart, informed choices that match your needs today — and protect you tomorrow.

When done right, unlocking your home equity can be the key to achieving important life goals, while still keeping your home and your future secure.