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.

Click here to schedule a call with our team to get approved for a home equity loan.

Over the years, our brokerage has guided many Ontario homeowners through decisions about using their home equity. Whether you're considering debt consolidation, funding home renovations, covering unexpected expenses, or investing in additional properties, we've answered countless questions to ensure our clients fully understand their options. Here, we've compiled clear answers to the most frequently asked questions about home equity loan rates, eligibility, and risks to help you navigate this important financial decision with confidence.

Qualifications for a Home Equity Loan in Ontario

Qualifying for a home equity loan typically depends on the amount of equity available in your home, your ability to repay the loan, and your overall credit profile

The qualification process begins with engaging a reputable mortgage broker who acts as your advocate and advisor throughout the process. Your broker will thoroughly review your financial situation by asking detailed questions about your short- and long-term financial goals, your current income, employment stability, existing debts, and credit history. They'll assess your overall borrowing capacity, determine a class of products that you might qualify for, and create a plan that aligns with your goals.

The mortgage broker will then explore various lenders, including traditional banks, credit unions, private lenders, and alternative lending institutions. This step is critical because different lenders have distinct criteria for lending. Brokers match your profile with lenders who are most likely to approve your application under the most favorable terms. Additionally, brokers negotiate with these lenders to secure the best possible interest rates, loan conditions, and repayment terms tailored specifically to your needs.

Documents Needed to Get a Home Equity Loan

The process of applying for a home equity loan requires some preparation but is typically straightforward if you're organized. Essential documents generally include:

A recent property appraisal conducted by an appraiser that is approved by the lender, typically arranged by the broker

A current mortgage statement showing your existing balance, interest rate, and monthly payments, if applicable.

An up-to-date property tax statement confirming your payments are current.

Valid identification documents, such as a driver’s license, passport, or other government-issued IDs.

Proof of income, which may include recent pay stubs, tax returns for the past two years, or bank statements if self-employed.

Organizing and submitting these documents upfront can significantly streamline the application and approval process, shortening the time to receiving your funds.

Risks Associated with Home Equity Loans

The primary risk associated with home equity loans involves your ability to consistently afford the monthly payments. If your financial circumstances change or you borrow more than you need or can comfortably repay, you risk financial strain and potentially jeopardizing your home, since your property acts as collateral. However, if you face cash flow difficulties (such as a sudden job loss), some lenders offer flexibility by allowing you to capitalize interest payments for up to one year. For instance, if your monthly payments are $400, the lender could add 12 months' worth of payments (a total of $4,800) to your loan balance, providing temporary relief by eliminating monthly payments for that year.

Over-leveraging your property—borrowing excessively or without a clear plan for repayment—can also leave you financially vulnerable during market downturns or in the face of unexpected life events like job loss or illness. Your broker's job is to mitigate these risks by thoroughly assessing your financial stability, future earning potential, and clearly defining how much you genuinely need versus how much you are qualified to borrow.

Home Equity Loan Fixed or Variable Interest Rate

In Ontario, the vast majority of home equity loans feature fixed interest rates. This fixed-rate structure provides homeowners with predictable and stable monthly payments throughout the loan term, making budgeting easier and reducing financial uncertainty.

However, a handful of lenders offer variable-rate home equity lines of credit (HELOCs). These variable-rate options fluctuate according to market conditions, meaning payments could increase or decrease over time. While variable-rate HELOCs might offer lower initial interest rates or potential savings if market rates decline, they also come with added uncertainty and risk if interest rates rise.

Choosing between a fixed-rate home equity loan and a variable-rate HELOC will ultimately depend on your individual financial circumstances, goals, and comfort level with risk.

Interest Rates for Home Equity Loans in Ontario

Currently in 2025, home equity loan interest rates in Ontario range broadly between approximately 6.99% to 13.99%. This variation largely depends on the loan-to-value (LTV) ratio of your property and taking into account of the individual factors such as your credit score, debt-to-income ratio, and employment stability. Typically, borrowers with higher equity, stronger credit scores, and lower debt levels secure the most competitive interest rates.

Additionally, interest rates vary among lender types. Traditional banks may offer lower rates but have stricter lending criteria, while private and alternative lenders may provide more flexible lending terms but typically at higher rates due to increased lending risk.

Fees Associated with Getting a Home Equity Loan

Yes, there are closing costs associatd with home equity loans. Common fees include:

• Appraisal fees, generally ranging between $400 to $600, depending on property size and location.
• Legal fees for handling property title transfers and loan documents
• Broker fees, which vary by broker and complexity of the loan, typically calculated as a percentage of the loan amount.
• Lender fees, also dependent on the lender and complexity, usually a percentage of the loan amount.

It's important to beware of brokers who promise you specific rates and fees upfront without first conducting thorough due diligence. Ultimately, only the lenders themselves can provide exact details on rates and associated fees, and these can only be accurately determined once all required documentation has been submitted and reviewed.

Consolidate Debt with a Home Equity Loan

Consolidating high-interest unsecured debts like personal loans or credit card balances can be highly effective when done through mortgage products such as home equity loans or HELOCs. These products typically offer lower interest rates and more manageable monthly payments, significantly improving your cash flow.

For example, if you have $50,000 in credit card debt, your minimum monthly payment would typically be around 2.5% of the outstanding balance—approximately $1,250 per month. By consolidating this debt into a home equity loan at, say, 9.99%, your monthly payment could decrease dramatically. Here's the simplified calculation:

Credit Card Debt Monthly Payment:

$50,000 x 2.5% monthly minimum = $1,250/month

Home Equity Loan Monthly Payment:

$50,000 x 9.99% ÷ 12 months = approximately $416/month

This represents cash flow savings of approximately $834 per month or over $10,000 per year.

However, debt consolidation should always be paired with responsible borrowing habits and a clear repayment strategy. Without discipline, consolidating debt could unintentionally lead to further financial challenges if new debts are accumulated afterward.

Buying a Second Property With Your Home Equity

Yes, it's possible to use your home equity to help fund the purchase of a second property, but you will need a knowledgable broker to help determine if the strategy is suitable for your situation.

Home equity loans are usually placed in second position behind your existing mortgage, meaning lenders typically charge higher interest rates due to increased risk. Because of this, home equity loans are often more suitable for short-term financing needs like improving cash flow or consolidating high-interest debt, rather than long-term property financing.

Additionally, when using equity to buy an investment property, you'll still need to qualify separately for a new mortgage on that property based on your income, credit, and overall financial situation.

A mortgage broker can help you evaluate alternative mortgage products that may offer better interest rates, lower costs, or more appropriate long-term financing solutions tailored specifically to investment property purchases. Consulting a broker will ensure you pursue the most strategic and financially sound approach.

How Long Does It Take to Get a Home Equity Loan?

Approval timelines for home equity loans in Ontario vary significantly depending on the broker's experience, the complexities of your situation, and your personal preparedness. We have helped clients get funded within 4 to 5 days, but the entire process typically takes about 2 weeks.

Private and alternative lenders typically offer approvals in a matter of days, often within 48 to 72 hours. Traditional banks, however, might take anywhere from two to four weeks due to their more comprehensive underwriting processes. Your preparedness with required documentation, appraisal arrangements, and working closely with your broker can expedite the process significantly.

How to Calculate How Much Equity Is Available

Calculating your available equity is straightforward but essential to understanding your borrowing potential. The basic formula is:

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

For example, if your home is currently valued at $1,000,000 and your remaining mortgage balance is $350,000, your available equity is $650,000. In Ontario, most lenders allow borrowing up to approximately 80% of your home’s value minus existing mortgage balances.

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

Lenders might lend up to $450,000 in the example above with a $1M home and a $350,000 mortgage,

Can You Get a Home Equity Loan With No Mortgage

Absolutely! If you own your home outright without a mortgage, you’re in an ideal position to obtain a home equity loan, since 100% of your home’s value is available equity. This scenario typically places you in a strong position with lenders, offering favorable loan terms, potentially lower interest rates, and flexible repayment options. However, even with substantial equity, lenders will still evaluate your ability to repay the loan based on your income, financial stability, and creditworthiness.

How Much Can You Borrow with a Home Equity Loan

In Ontario, home equity loans typically allow you to borrow up to 80% of your home's appraised value, subtracting any existing mortgages or secured debts.

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

For example, if your property is valued at $700,000, lenders might offer up to $560,000 (80%). If you currently have a mortgage balance of $300,000, your maximum potential home equity loan would be around $260,000. Certain private lenders might be willing to lend higher percentages, but these cases often involve higher interest rates and stricter repayment conditions. Consulting a mortgage broker will provide a clear understanding of your maximum borrowing capacity and the best lenders to approach.

Can You Get a Home Equity Loan with No Income?

While traditional banks require proof of steady income, alternative and private lenders offer more flexibility.

Most home equity loan lenders are willing to offer equity-based lending, meaning they assess your eligibility primarily based on property equity rather than income alone. This scenario is especially common for retirees or individuals who temporarily experience reduced or no formal employment income. These equity-based loans usually have higher interest rates to compensate for the additional risk the lender assumes. It’s crucial to discuss your financial situation thoroughly with a mortgage broker to determine the feasibility of such a loan and whether the terms align with your long-term financial objectives.

Can You Get a Home Equity Loan with Bad Credit?

Yes, you can still qualify for a home equity loan even with a low credit score.

Many Ontario lenders, particularly private and alternative lenders, specialize in providing home equity loans to individuals with lower credit scores. These lenders emphasize property equity and value more than credit history alone. Although your interest rates might be higher due to perceived risk, successfully repaying your debt can improve your credit score within 60 to 90 days, positioning you for better borrowing opportunities in the future. Working closely with a mortgage broker can help you secure the most suitable lender and loan structure for your situation.

Credit Score Impact with a Home Equity Loan

Taking out a home equity loan itself doesn't negatively impact your credit score. In fact, when you use a home equity loan responsibly—particularly to pay off high-interest unsecured debts, such as credit cards—it can significantly improve your credit score within 60 to 90 days.

Consolidating unsecured debts into a home equity loan reduces your credit utilization ratio, which is a major factor influencing your credit score. For example, paying off high-balance credit cards using a home equity loan often boosts your score noticeably within a few months, provided you continue making your new loan payments consistently and on time.

However, remember that while using home equity to manage debt can positively influence your credit, missed or late payments on your loan could harm your credit rating. Always ensure affordability and timely repayment to fully benefit from this financial strategy.

Ontario Home Equity Loan Rates and Questions

Home equity loans in Ontario are incredibly useful financial tools for achieving various personal and financial objectives, from consolidating debt and managing cash flow to funding significant life expenses or investments. However, careful consideration and planning are essential to maximize benefits and minimize risks. Engaging with an experienced mortgage broker can significantly ease the process by ensuring you're well-informed, matched with suitable lenders, and securing the best possible loan terms tailored to your financial circumstances and goals.