Looking to Get a Loan Against Your House 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.

Owning a home is not just about having a place to live; your home is also a valuable financial asset. If you need access to funds for debt consolidation, home renovations, investments, or emergencies, borrowing against your home equity can be a cost-effective choice. Understanding the process of how to get a loan against your house in Ontario can be very helpful in your decision-making process.

What Does It Mean to Borrow Against Your Home?

When you borrow against your house, you’re leveraging your home’s equity as collateral for a loan. Equity is the difference between the market value of your home and any outstanding mortgage balance. The more equity you have, the more you may be able to borrow. You can also think of your home equity as a savings account built into your property.

There are 3 primary ways to access home equity in Ontario:

Second Mortgage – An additional loan taken out on your home, separate from your primary mortgage.

Home Equity Loan – A lump sum loan secured against your home, with fixed or variable interest rates.

Home Equity Line of Credit (HELOC) – A revolving credit line that allows you to borrow and repay funds as needed.

Each option has different advantages and considerations, which we’ll explore in detail below.

Types of Loans Against Your House

1. Second Mortgage

Assuming that you have an existing mortgage, or a first mortgage, on your property, a second mortgage is an additional loan secured against your home. Unlike a HELOC, which is revolving, a second mortgage is a fixed loan with set payments. A second mortgage is generally one of the most cost-effective ways of borrowing because it is secured against a property, unlike unsecured debt, like credit cards or personal lines of credit.

Pros:

Lower interest rates and payments compared to unsecured products + some HELOCs

Allows access to home equity without affecting your first mortgage

Fixed payments provide stability

Cons:

Higher interest rates compared to a first mortgage

2. Home Equity Loan

A home equity loan is essentially a second mortgage provided by a non-institutional or private lender. The difference between a home equity loan and a second mortgage is that a second mortgage is usually offered by banks and have stricter income and credit requirements. On the contrary, a home equity loan is offered by non-institutional lenders based on the equity available, with less focus on the borrower's income and credit qualifications.

Home equity loans provide a one-time lump sum amount, typically up to 80% of your home’s appraised value minus your existing mortgage balance. Aside from the qualification process, home equity loans are the same as traditional loans, with a fixed rate, payment amount, and repayment schedule.

Pros:

Lower interest rates and payments compared to unsecured products + some HELOCs

Fixed payments provide stability

Best for one-time expenses like debt consolidation or home renovations

Cons:

Less flexibility since you receive a lump sum upfront

3. Home Equity Line of Credit (HELOC)

A HELOC works like a credit card, where you can borrow as much or as little as you need, up to your credit limit. Interest is only charged on the amount you use. A home equity line of credit is a secured line of credit using your property as collateral, and has a lower interest rate and higher credit limit compared with unsecured products like personal lines of credit and loans.

Pros:

Interest rates are lower than personal loans and credit cards

Only pay interest on the amount borrowed

Flexible borrowing and repayment structure.

Cons:

Slightly higher interest rates compared with fixed loan products like second mortgages

Lenders may adjust credit limits based on market conditions

How to Qualify for a Loan Against Your Home

Lenders evaluate several factors when determining your eligibility for a loan against your house. These include:

Home Equity – Most lenders allow borrowing up to 80% of your home’s appraised value (also known as 80% loan-to-value)

Property Type & Location – Properties in rural areas typically have lower approval rates

Credit Score – Higher credit scores qualify for better interest rates

Income & Debt-to-Income Ratio – Lenders assess your ability to repay the loan

Employment & Income Stability – A steady income increases loan approval chances

Working with a reputable mortgage broker is essential in the shopping process as they connect you with lenders suited to your financial situation. If you have a lower credit score or little-to-no income, private lenders can offer effective solutions that banks won’t.

Applying for a Loan Against Your Home in Canada

Step 1: Determine How Much Equity You Have

Start by calculating your home equity: Home Value – Mortgage Balance = Available Equity

For example, if your home is worth $1,000,000 and your mortgage balance is $350,000, you have $650,000 in equity. Most lenders allow borrowing up to 80% of the home’s value, meaning you could access up to $450,000.

Step 2: Assess Your Financial Needs

Consider why you need the loan and how much you need. Majority of clients are in need of cash flow, debt consolidation, and renovations.

Step 3: Find a Reputable Mortgage Broker

The most important part of the process, arguably, is ensuring your broker is knowledgeable and reputable. Your broker is responsible for assessing your qualifications, determining product suitability, and protecting your interests.

Step 4: Submit Supporting Documents

You’ll need to provide:

Existing mortgage statements (if applicable)

Proof of income (i.e. pay stubs, tax returns, bank statements)

Appraisal from an approved appraiser (usually arranged by the broker)

Credit history (broker will pull your credit after your consent)

Step 5: Loan Approval & Disbursement

The approval process, after all the documents have been submitted, generally will take about 24 to 48 hours. In urgent situations, the broker should be able to fast track your application.

Interest Rates for Loans Against Your House

The interest rates for home equity loans, home equity lines of credit, and second mortgages can vary greatly. As of March 2025, interest rates for home equity loans in Ontario typically range from 6.99% to 12.99%. For HELOCs, interest rates can start at 7.49% in the second position (if you have an existing mortgage), and P+0.50% in the first position (if you are a prime borrower without a first mortgage).

Talk to your mortgage broker to find out which product is the most suitable for you.

Borrowing Against Your House with Bad Credit

Yes, you can get a loan against your home with bad credit, but possibly with higher interest rates and lower borrowing limits. However, if you use the loan to pay off unsecured debt, your credit score should improve—often within 90 days of paying off balances. Maintaining a good score afterward will help you qualify for better rates in the future.

Benefits of Using Your Home Equity to Pay Off Debt

Using home equity to consolidate unsecured debt, such as credit cards or personal loans, typically results in lower interest rates and reduced monthly payments. For example, a $50,000 credit card balance may require a monthly payment of approximately 2.5% of the balance, or $1,250 per month. By comparison, a home equity loan with an interest rate of 9.99% could significantly lower your interest payment by almost $800 a month, saving you almost $10,000 a year.

Benefits of Using a Mortgage Broker to Get a Loan

Navigating the home loan process can be overwhelming, especially when comparing lenders and terms. Working with a mortgage broker provides several advantages:

Protect Your Interests: Licensed mortgage brokers have a fiduciary responsibility to protect the borrowers.

Access to Multiple Lenders: Unlike banks, which offer only their own products, brokers have access to multiple lending options, including private lenders.

Better Interest Rates: Brokers negotiate competitive rates on your behalf.

Customized Solutions: Whether you have a high debt ratio, self-employment income, or credit issues, brokers can find lenders willing to work with you.

Should You Refinance or Get a Home Loan?

Refinancing may be a better option if your mortgage is set to mature within the next year, as it allows you to restructure your loan terms. However, if you want to retain your current mortgage while accessing additional funds, a second mortgage, home equity loan, or HELOC may be more suitable.

Your decision should also factor in your financial qualifications and the urgency of your need for funds.

Determining Your Home's Current Market Value

Lenders determine your home’s market value through an independent third-party appraisal. The appraiser evaluates recent comparable property sales in your area to establish a fair market price. This appraisal is a critical step, as it ensures both you and the lender are working with an accurate valuation, which will improve your chance of getting the best offers.

How to Get a Loan Against Your House in Canada

A loan against your house can be a smart financial move when used wisely. Whether you need funds for renovations, debt consolidation, or investment opportunities, unlocking your home equity can provide the financial flexibility you need.

However, not all lenders and loan options are the same. Choosing the right mortgage broker ensures you get the best terms and avoid costly mistakes. If you’re considering a home equity loan, reaching out to a mortgage professional can help you navigate the process and find the best solution for your financial goals.