Looking for Home Equity Loans 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, click here to schedule a call with our team.

For many Canadian homeowners, their property isn’t just a place to live—it’s also a valuable financial tool. As home values have risen in recent years, more and more people are looking at ways to use their equity to meet other financial goals. One of the most common strategies is a home equity loan.

But how much can you actually borrow? And what determines your borrowing limit? In this two-part guide, we’ll break it all down in simple terms, so you can understand your options, your limits, and how to get the most out of your home equity loan.

What Is Home Equity?

Home equity is the portion of your home that you truly own. It’s the difference between what your home is worth on the market and how much you still owe on your mortgage. As you pay down your mortgage or as the market value of your home rises, your equity grows.

Equity Available = Current Market Value of Home - Outstanding Mortgage Balance

For example, if your home is worth $700,000 and you still owe $300,000 on your mortgage, your equity is $400,000.

How Much Can You Borrow with a Home Equity Loan?

Most lenders in Canada will allow you to borrow up to 80% of your home’s appraised value, minus whatever is still owed on your mortgage. This is based on what’s called the Loan-to-Value ratio (LTV).

Equity Available for Borrowing = Current Market Value of Home * 0.80 - Outstanding Mortgage Balance

Home appraised value: $700,000

80% of value: $560,000

Existing mortgage: $300,000

Maximum home equity loan: $260,000

So in this case, you could borrow up to $260,000 through a home equity loan or line of credit. This number can vary slightly depending on the lender, your credit, and the specific type of loan.

Factors That Affect How Much You Can Borrow

Several factors influence how much a lender will approve for a home equity loan. Some are property-related, while others are tied to your personal finances.

1. Your Home’s Appraised Value

Lenders base your borrowing limit on the most recent appraised value of your home—not what you paid for it years ago. If your home has appreciated in value, that gives you more borrowing room.

2. Your Mortgage Balance

The less you owe on your current mortgage, the more equity you have to work with. Lenders subtract your mortgage balance from 80% of your home’s value to calculate how much equity you can borrow against.

3. Credit Score

Your credit score plays a big role, especially with traditional lenders like banks. A higher score may allow you to borrow more and secure a better interest rate. If your credit score is lower, you may still qualify through a private lender, but the amount you can borrow may be more limited, and the rate will likely be higher.

4. Income and Employment Status

Lenders want to see that you can repay the loan. Proof of stable income—whether from employment, self-employment, or retirement income—is essential. If your income is lower or irregular, that might reduce the loan amount you’re eligible for.

5. Debt-to-Income Ratio

Even if you have strong equity, lenders look at how much debt you already carry in relation to your income. If you’re already carrying a heavy debt load, they may offer less financing to avoid putting you at risk of default.

How to Borrow Against Your Home Equity

There are different ways to borrow against your home’s equity. The best option depends on your goals, how you plan to use the money, and your financial profile.

Home Equity Loan (Second Mortgage)

This is a lump-sum loan with a fixed term and interest rate. You receive the money all at once and repay it over a set number of years, with regular payments. This is ideal for one-time costs like debt consolidation, tuition, or major renovations.

Home Equity Line of Credit (HELOC)

This is a revolving credit line secured by your home. You can borrow from it as needed, up to your approved limit, and only pay interest on the amount you use. HELOCs are great for ongoing or flexible expenses like phased renovations or emergency funds.

Mortgage Refinancing

Mortgage refinancing is typically done through the major banks or B lenders and have stricter income and credit requirements.

How Do You Know Which Loan Is Right for You?

Choosing the right product depends on your needs:

Need a lump sum now for debt consolidation? A fixed-term home equity loan might be best.

Want flexibility and ongoing access to funds? A HELOC may be the better fit.

Have strong credit, good income, and close to the maturity date? Refinancing might be the way to go.

A mortgage broker can help you compare options from both traditional and private lenders and walk you through the pros and cons of each based on your situation.

What Can You Use a Home Equity Loan For?

There are no restrictions on how you use your funds. Most homeowners use home equity loans for practical or long-term investments, including:

Renovations and repairs – Upgrading your kitchen or finishing a basement can increase your home’s value.

Debt consolidation – Pay off high-interest credit cards and loans with one lower-rate loan.

Living expenses – Cover living expenses for yourself or a family member.

Emergency expenses – Access fast funds when life throws you a curveball.

Investment opportunities – Use the funds to purchase income properties, invest in a business, or buy assets.

While home equity loans can offer big benefits, they’re still debt—and because they’re secured by your home, it’s essential to use them wisely.

Pros and Cons of Borrowing Against Home Equity

Before moving forward with a home equity loan, it’s important to weigh the benefits and potential downsides. Like any financial tool, it can be incredibly useful—but only when used wisely.

Pros:

Lower Interest Rates: Home equity loans are secured by your property, which typically means lower interest rates than unsecured loans or credit cards.

Larger Loan Amounts: Because you’re borrowing against your home, you can access more money than most personal loans allow.

Fixed Payments: Many home equity loans come with fixed interest rates and fixed terms, making it easier to budget.

Flexible Use of Funds: You can use the funds however you need—whether for debt consolidation, home improvements, or other large expenses.

Cons:

Your Home Is on the Line: If you default on the loan, the lender has the legal right to pursue your property as repayment.

Fees and Closing Costs: You’ll need to cover appraisal, legal, and possibly broker fees, which can eat into the total amount you receive.

How to Apply for a Home Equity Loan in Ontario

Applying for a home equity loan is relatively straightforward, especially if you’re working with an experienced mortgage broker. Here's a step-by-step look at the typical process.

Step 1: Initial Consultation

Your broker will discuss your goals, review your financial situation, and help estimate how much equity you can borrow.

Step 2: Gather Documents

You’ll need to provide:

Recent mortgage statement

Property tax bill

Proof of income (pay stubs, T4s, or bank statements)

Details of debts you plan to consolidate (if applicable)

Valid IDs

Step 3: Home Appraisal

Your broker will arrange for a lender-approved appraiser to assess the current value of your property. The lender uses this value to determine how much they’re willing to lend.

Step 4: Loan Approval and Terms

Your lender or broker will confirm the loan amount, interest rate, term, payment schedule, and any conditions.

Step 5: Legal Signing and Disbursement

You’ll sign the final paperwork with a lawyer. Once everything is in place, the funds are released—either to you directly or to pay off debts on your behalf, depending on your plan.

Home Equity Loan Alternatives

If you don’t qualify for a home equity loan—or if you’re not comfortable putting your home on the line—there are a few other options you might consider:

1. Personal Loan

Unsecured personal loans are easier to access and don’t require home equity. However, they usually come with higher interest rates and lower borrowing limits.

2. Reverse Mortgage

If you’re over 55 and have significant equity, a reverse mortgage lets you access that equity without monthly payments. You repay it only when you sell the home or pass away.

3. Consumer Proposal

If you’re drowning in debt and struggling to qualify for any type of loan, a consumer proposal may help reduce your total debts through a negotiated plan with creditors. These options affect your credit, but they may offer the relief you need.

Is a Home Equity Loan Right for You?

A home equity loan is a powerful financial tool—but only if used with a clear purpose and a responsible plan. It works best when:

You have at least 20% equity in your home

You’re looking to consolidate high-interest debt or fund large, productive expenses

You’re working with a trusted broker who explains all your options

If you meet those conditions, a home equity loan can reduce your financial stress, help you save money, and allow you to make meaningful progress toward your goals.