Looking for Home Equity Loans in Ontario?

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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.

If you're a homeowner in Canada, you've probably heard the term "home equity loan," but you might not know exactly how it works. Simply put, a home equity loan allows you to borrow money by using the equity in your home as collateral. Equity is the difference between your home's current market value and how much you owe on your mortgage.

How Does a Home Equity Loan Work in Canada?

Let's say your home is worth $500,000, and your current mortgage balance is $300,000. That means you have $200,000 in home equity. A home equity loan lets you borrow against this amount. Lenders usually let you borrow up to 80% of your home's value, though this can vary based on your financial situation and the lender’s policies.

One of the key benefits of a home equity loan is that you usually get a lower interest rate than with unsecured loans, like credit cards or personal loans. That's because your home backs up the loan, making it less risky for the lender.

Can You Get a Home Equity Loan with Bad Credit?

The good news is, yes—you can get a home equity loan with bad credit.

When you're applying for a home equity loan, the most important factor lenders look at is how much equity you have in your home. Having a lot of equity significantly improves your chances of approval, even if your credit score is less than ideal.

However, your credit score does matter in determining the interest rate and the amount you can borrow. If your credit score is low, the lender might offer you a higher interest rate or a slightly lower loan amount. This doesn't mean you can't secure a good deal, though. If you have substantial equity in your home—meaning your loan-to-value ratio is low—you can still get reasonable pricing.

On the other hand, having good credit will always help. It can lower your interest rates and might even increase the amount lenders are willing to lend you. But again, don't be discouraged if your credit isn't perfect; your home equity can still open the door to affordable financing.

Can You Get a Home Equity Loan Without Income?

Yes, you can also get a home equity loan even if you don't have a traditional source of income. The key factor lenders consider in this scenario is how much equity you have available in your home, or your loan-to-value (LTV) ratio. The more equity you have, the easier it will be to qualify, even if you don’t have regular income.

Some lenders allow interest reserves where you don’t need to make monthly payments right away. Instead, they let you roll your interest payments into the loan itself. This means no monthly payments are needed for the entire term, typically up to 12 months. This can be very helpful if you need money now but anticipate being able to repay the loan later, such as when you sell the home or get a new job.

If this sounds like it might work for you, talk to your broker about setting up an interest reserve.

How to Apply for a Home Equity Loan Online

Click here if you want to apply online for a home equity loan in Ontario.

After submitting your application, you'll get two emails with the first email inviting you to schedule a call with our team. This call typically takes about 15 to 20 minutes and helps your agent understand your unique situation and goals. You'll receive a conditional approval during or shortly after this call.

The second email contains a link for you to provide additional details to fast-track your application.

Once all your details are submitted, your broker will prepare a Credit Summary Report. This report clearly lays out your credit history, debt-to-income ratio, and what loans you qualify for. It even shows you how much money you could save if you're consolidating debts.

If you're happy with the terms presented, your broker will gather the necessary documents to finalize your application.

The whole process generally takes around 1 to 2 weeks from start to finish.

Documents Needed for Home Equity Loans in Ontario

When applying for your home equity loan, you'll typically need the following documents:

Mortgage statement: This shows how much you currently owe on your home.

Property tax bill: This verifies your property taxes are up-to-date.

Income confirmation: Even if your income isn't the main approval factor, having this documentation helps lenders offer the best terms possible.

Appraisal arranged by the broker: Your broker will arrange an appraisal with a lender-approved appraiser. This appraisal confirms the market value of your home, ensuring everyone is clear on exactly how much equity you have.

Home Equity Loan Interest Rates in Ontario

As of April 2025, interest rates for home equity loans in Ontario typically start around 6.99%. Your exact rate depends mainly on the following:

Equity in your home: The more equity you have, the lower your interest rate will typically be.

Credit and income: Better credit and stable income can further reduce your interest rate.

Even with less-than-perfect credit, if you have significant home equity, you can still secure competitive rates. This makes home equity loans especially attractive for consolidating debts or managing financial needs at a lower cost than unsecured loans.

How Much Can You Borrow with a Home Equity Loan?

The amount you can borrow with a home equity loan depends on a few key factors, but primarily on the equity in your home. In Canada, lenders typically allow you to borrow up to 80% of your home's market value minus any outstanding mortgage.

Suppose your home is worth $600,000.

You currently owe $350,000 on your mortgage.

80% of your home's value is $480,000 (80% of $600,000).

Subtracting your existing mortgage ($350,000), you have $130,000 of equity available to borrow.

While 80% is common, some private or alternative lenders may allow you to borrow slightly more—sometimes even up to 85%, depending on your situation.

It's important to discuss your exact borrowing limit with your broker, who will help calculate exactly how much equity you have and how much you can responsibly borrow.

Common Reasons to Get a Home Equity Loan

Home equity loans are popular for many reasons beyond debt consolidation. Here are some of the most frequent uses:

Debt Consolidation

Using your home equity to pay off credit cards and other unsecured debt will significantly reduce your interest rate and your monthly interest payments. From our experience, consolidating $50,000 in credit card debt can save you around $750 per month or $9,000 per year.

Home Renovations

Renovating your home not only improves your living space but can significantly boost your property's value. A home equity loan lets you access funds at lower rates than credit cards or personal loans, making major renovations more affordable.

Living Expenses

Occasionally, homeowners face temporary financial hardship, like job loss or reduced income. In these cases, a home equity loan can provide breathing room to cover everyday expenses until finances stabilize.

No matter the reason, it’s crucial to have a clear plan for repayment so you protect the equity you've worked so hard to build in your home.

Investments and Opportunities

Some Canadians use home equity loans to invest or capitalize on business opportunities. Because interest rates on home equity loans are relatively low, this can be a strategic way to access capital if you see a promising investment or business idea.

Apply Online for a Bad Credit Home Equity Loan

Getting a home equity loan with bad credit online in Canada is entirely possible—and can be one of the smartest financial decisions you'll ever make. By leveraging the equity you've built up in your home, you can access money at lower interest rates, consolidate debt, and handle large expenses confidently.

Remember, while your credit score matters, it's not the only factor lenders consider. With significant equity in your home, even borrowers with less-than-perfect credit can find affordable solutions.