Looking to Tap into Your Home Equity 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 get approved for a home equity loan or HELOC, click here to schedule a call with our team.

Building home equity is a powerful financial advantage for homeowners in Ontario. As your home increases in value and your mortgage balance decreases, you build equity—the difference between what your home is worth and what you owe.

Many homeowners believe that to tap into this equity, they must refinance their existing mortgage. That’s not true. There are ways to access your home equity without refinancing, and in many cases, these methods can be simpler, faster, and less expensive.

How to Use Your Home Equity Without Refinancing

Always consult an experienced mortgage broker. A broker understands the pros and cons of each option and can match you with the right lender and product based on your goals, property type, and financial situation.

In Ontario, three main options let you unlock home equity without touching your existing first mortgage:

Second Mortgage

A second mortgage is an additional loan secured against your home. It doesn’t replace your first mortgage. You continue making payments on both loans. A second mortgage is a lump sum payment, which can be ideal if you know exactly how much money you need. Private lenders and alternative lenders often offer second mortgages when traditional banks won’t.

Home Equity Line of Credit (HELOC)

A HELOC gives you a revolving credit line, secured by the equity in your home. Think of it as a large credit card with lower interest rates. You can borrow, repay, and borrow again up to a set limit. It’s ideal if you’re not sure when or how much money you’ll need over time, such as for home renovations or ongoing expenses.

Home Equity Loan

A home equity loan is a lump-sum loan, similar to a second mortgage, but it typically comes with a fixed interest rate and predictable payments. This is a good choice if you want to use the funds all at once, such as for debt consolidation or a major purchase. Home equity loans are often easier to qualify for than HELOCs and are less sensitive to property location.

How Much Can You Borrow Without Refinancing?

The amount you can borrow against your home equity depends on your home’s appraised value and the balance of your existing mortgage. In Ontario, most lenders allow you to borrow up to 80% of your home’s appraised value when combining your first mortgage and the second loan.

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

For example:

Your home is worth $800,000

You owe $500,000 on your first mortgage

You could borrow up to $140,000 in a second mortgage or home equity loan (80% of $800,000 = $640,000; $640,000 - $500,000 = $140,000)

Other factors also affect how much you qualify for, including:

Your credit score

Your income and employment stability

Your debt-to-income ratio

The property type and location

An experienced mortgage broker can calculate your maximum borrowing power quickly and help you compare offers from different lenders.

Using Your Home Equity to Pay Off Debt

One of the smartest ways Ontario homeowners use home equity is for debt consolidation. High-interest debt like credit cards, payday loans, or personal lines of credit can be extremely expensive to manage. By using your home equity, you can pay off these debts with a much lower interest rate loan.

Lower Interest Costs

Credit cards in Ontario often charge 19% to 29% interest.

A home equity loan or HELOC can offer rates starting around 6.99% to 7.49%.

The interest savings can easily translate to hundreds of dollars each month.

Improved Monthly Cash Flow

By replacing multiple debt payments with one affordable loan payment, homeowners often free up significant cash flow to manage everyday expenses or save for future needs.

Most clients pay about 50% less interest by consolidating debt with their home equity. As an example, you can save up to $750/month or $9,000/year by consolidating about $50,000 in credit card debt.

Boost Your Credit Score

When you pay off credit cards or lines of credit using home equity, your credit utilization ratio drops. Credit utilization accounts for 35% of your credit score. Homeowners typically see noticeable improvements within 60 to 90 days of clearing their balances.

A homeowner with $30,000 in credit card debt at 20% interest could cut their monthly payments dramatically by replacing it with a home equity loan at 7%. At the same time, they would likely see their credit score improve as their revolving balances are paid off.

Explore Your Options With a Mortgage Broker

Homeowners in Ontario have access to a wide range of lenders, from major banks to alternative lenders and private lenders. Each has different approval criteria, rates, and conditions. A mortgage broker works on your behalf to:

Assess your full financial situation

Help you decide whether a second mortgage, home equity loan, or HELOC fits your needs

Shop the market to find the most competitive rates and terms

Explain the pros and cons of each product in plain English

Mortgage brokers don’t work for any one lender. Their goal is to help you get the best deal possible, saving you time, money, and frustration.

Home Equity Loan and HELOC Rates in Ontario

As of 2025, interest rates for home equity products in Ontario vary depending on your property, credit, and lender. Your mortgage broker can help you compare rates from different lenders and understand how the rate affects your monthly payment and overall borrowing costs.

Home Equity Loans: Rates typically start at 6.99%. These loans usually have a fixed interest rate, which gives you predictable payments over the term of the loan.

HELOCs: Rates generally start at 7.49%. HELOC rates are usually variable, which means they can go up or down based on the lender’s prime rate.

Rates can vary based on:

Property type (single-family homes may get better rates than condos or rural properties)

Location (urban homes often get better offers than rural properties)

Loan-to-value (LTV) ratio (lower LTV usually means a lower rate)

Credit score and income (strong credit and stable income help secure better rates)

Home Equity Loan vs. Home Equity Line of Credit

Both options let you use your home’s value, but they work in different ways.

Home Equity Line of Credit (HELOC)

A HELOC is a revolving product. You can borrow as much or as little as you need, up to your credit limit, and repay it at your own pace (as long as you meet minimum interest payments).

Pros:

Flexibility to borrow only what you need

Interest-only payments are available

Reuse the credit line as you repay it

Cons:

Slightly higher interest rates compared to home equity loans

May not be available in all property locations

Risk of rate increases if your HELOC rate is variable

HELOCs are a good fit if:

You’re unsure exactly when you’ll need the money

You’re financing a project over time (ex: home renovations spread over several months)

Home Equity Loan

A home equity loan is a lump-sum loan with a set interest rate and a fixed repayment term.

Pros:

Lower interest rate than a HELOC in many cases

Predictable monthly payments

Less location restrictions compared to HELOCs

Cons:

You pay interest on the full loan amount from day one

You cannot re-borrow once the loan is paid down

Home equity loans are a better choice if:

You know you will deploy the funds immediately (ex: debt consolidation, vehicle purchase, tuition fees)

You want certainty about how much you owe each month

If you want flexibility, go with a HELOC. If you want stability and a potentially lower rate, choose a home equity loan.

When Should You Consider Refinancing?

Sometimes, refinancing your first mortgage still makes sense. The key is to weigh the costs and benefits carefully.

You should consult a mortgage broker if you’re unsure. A broker can:

Help you compare your blended rate (the combined cost of your first mortgage plus a second mortgage or HELOC)

Advise whether refinancing is worth it based on your borrowing needs

General rule of thumb:

If the amount you need to borrow in second position (ex: second mortgage or home equity loan) is much smaller than your first mortgage, and your first mortgage has a good rate, it’s usually best to leave your first mortgage untouched.

However, if you want to borrow a large amount and your first mortgage rate is high or your term is ending soon, refinancing could still be the smarter move.

This is where a mortgage broker’s expertise really pays off—they will do the math and give you an unbiased recommendation.