Looking to Borrow Against Your House in Ontario?

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If you’re a homeowner in Canada, you’ve probably heard the phrase “borrowing against your house.” It might sound a little technical, but it’s actually a very common way for Canadians to access money—especially for things like paying off debt, funding renovations, or covering big expenses. In this article, we’ll walk you through how it all works in simple, clear terms.

Let's review how much you can borrow, how lenders calculate it, and what your options are—especially if you have bad credit or irregular income.

What Does Borrowing Against Your House Mean?

Borrowing against your house means using the equity you’ve built in your home to take out a home equity loan or line of credit. It’s like tapping into the value of your home to access cash—without having to sell the property.

You’re still the owner of your home, but a lender gives you a loan that’s secured by your house. Because the loan is backed by your property, interest rates are usually much lower than unsecured loans like credit cards or payday loans.

How to Calculate How Much Equity You Have

Equity is the part of your home that you truly own. You can figure it out by subtracting what you still owe on your mortgage from your home’s current market value.

Current Market Value - Existing Mortgages = Total Equity Remaining

Your home is worth $700,000. You still owe $300,000 on your mortgage.

Your equity is: $700,000 - $300,000 = $400,000

That $400,000 is your home equity. It’s the amount of value you’ve built up over time, and it’s what lenders look at when deciding how much money you can borrow.

Equity can grow in 2 ways:

As you pay down your mortgage over the years

If your property value increases

How to Calculate the Loan-to-Value Ratio (LTV)

Now that you know how to calculate equity, the next step is understanding your loan-to-value ratio, or LTV. This is how lenders figure out how much risk they’re taking on when lending you money.

LTV compares your loan balance to the value of your home. To calculate it:

(Total Mortgage Balance ÷ Property Value) × 100 = LTV%

Let’s say your home is worth $700,000 and you owe $300,000 on your mortgage.

$300,000 ÷ $700,000 = 0.428

0.428 × 100 = 42.8% LTV

Lenders in Canada usually allow you to borrow up to 80% of your home’s value. That means your total mortgage and any new loans can’t go over 80% LTV.

So in the same example:

$700,000 × 80% = $560,000 maximum total borrowing.

You already owe $300,000, so you can borrow up to $260,000 more.

This is called your available equity.

How Much Can You Borrow Against Your House?

In Canada, most lenders allow you to borrow up to 80% of your home’s current market value—but they’ll subtract whatever you still owe on your mortgage. The result is your available equity, which is the maximum amount you can borrow.

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

Let’s break it down with an example:

Imagine your home is worth $750,000 and you still owe $300,000 on your mortgage.

Take 80% of your home’s value: $750,000 × 0.80 = $600,000

Subtract what you owe: $600,000 – $300,000 = $300,000

So in this case, you could borrow up to $300,000 against your house, depending on your income, credit, and the lender’s rules.

If your home is fully paid off and worth $600,000, then 80% of its value would be $480,000, and that would be the maximum you could borrow from a traditional lender.

This formula helps you understand what’s realistically available to you and sets the foundation for choosing the right borrowing option.

How to Borrow Against Your House in Canada

The process of borrowing against your home is easier when you understand the steps involved. Here’s a simplified version:

Speak to a Mortgage Broker: They’ll assess your home value, remaining mortgage balance, credit, and income.

Broker to Arrange Appraisal: Lenders will want to confirm your home’s value before lending.

Choose a Loan Option: Your broker will make recommendations depending on your needs and lender guidelines, and you’ll choose between a home equity loan, HELOC, or refinance.

Submit Paperwork: This includes mortgage statements, property tax bills, proof of income, and ID.

Receive Funds: Once approved, you’ll sign loan documents and the funds are deposited, often within a few days to a couple of weeks.

Whether you go through a major bank, B lender, or private lender, working with a broker often speeds up the process and gives you more options.

Different Ways to Borrow Against Your House

There are three main ways you can borrow against your home in Canada:

1. Home Equity Loan (Second Mortgage)

This is a lump-sum loan based on the equity in your home. It has a fixed term and fixed payments, often used for one-time expenses like debt consolidation or large renovations.

Best for: One-time needs like debt consolidation, large purchases, or major home renovations.

Pros: Fixed payments, stable interest rate, simple structure.

Cons: Less flexible than a HELOC, slightly higher interest than a first mortgage refinance.

2. Home Equity Line of Credit (HELOC)

A HELOC works like a credit card—once it’s set up, you can borrow money when needed and only pay interest on what you use. It’s flexible and ideal for ongoing projects or emergencies.

Best for: Ongoing expenses, emergency funds, or future projects.

Pros: Flexible borrowing, interest-only payments available, reusable funds.

Cons: Can lead to over-borrowing if not managed carefully.

Note: Major banks will only offer a HELOC if your first mortgage is also with them.

3. Mortgage Refinance

This replaces your current mortgage with a new, larger one. The extra amount borrowed is given to you in cash. Refinancing works best when you’re OK with breaking your current mortgage (and any penalties) to lock in a new rate and access equity.

Best for: Lowering your interest rate, simplifying payments, or accessing large amounts of equity.

Pros: One single payment, lower interest rates compared to a second mortgage, possible to stretch over a longer amortization.

Cons: You may have to pay a penalty to break your current mortgage early.

Can You Borrow With Bad Credit or Low Income?

Yes, it’s possible to borrow against your house even if you have bad credit or low income—but the process depends on the type of lender and the product you qualify for.

So, if your credit is poor or your income is irregular (like self-employment or retirement), your best bet is to speak with a mortgage broker. They can match you with the right type of lender based on your situation.

Major Banks: They usually require a credit score of 680 or higher and strong income proof. If you don’t meet those, you likely won’t get approved.

Alternative (B) Lenders: These lenders may accept lower credit scores (around 550+) and are more flexible with income. Rates are a bit higher than banks.

Private Lenders: They don’t rely heavily on credit or income. As long as you have enough equity in your home, they’ll consider your application. These are great for short-term borrowing or situations like missed mortgage payments, income challenges, or debt consolidation.

Retired, Self-Employed, or Unemployed?

Even without a traditional income, it’s still possible to borrow against your home in Canada.

Retired or on fixed income: Lenders may accept pension statements or investment income.

Self-employed: Some lenders accept bank statements or business financials instead of standard T4s.

No income: In cases where the equity is strong and credit is decent, private lenders may offer interest-only loans without income documentation.

This is where a mortgage broker really becomes important—they can review your full financial picture and match you with lenders who accept non-traditional income or equity-based lending.

Why Borrow Against Your House in Canada?

People borrow against their homes for many reasons. Some of the most common include:

Debt Consolidation: Paying off credit cards or loans with a lower interest home equity loan

Renovations: Upgrading kitchens, bathrooms, or adding space to improve home value

Living Expenses: Improving cash flow for the household in the short-term

Emergency Expenses: Medical bills, legal costs, or urgent home repairs

Business Funding: Using equity to start or grow a small business

Borrowing against your house is often cheaper than using high-interest loans or credit cards—and you can access large amounts if you have enough equity.

Borrowing Against Your House In Canada

If you’ve built up equity in your home, borrowing against it can give you the freedom to tackle important financial goals—like paying off debt, upgrading your home, or investing in your future.

But the key is to borrow smart. Understand your numbers. Know your options. Talk to a professional who can guide you based on your unique financial situation.

Whether you go through a bank, an alternative lender, or a private lender, make sure the decision fits your budget and long-term goals. Your home is likely your biggest asset—using it wisely can unlock real financial relief or opportunity.