Last reviewed: 3 October 2026
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Borrowing against your home equity in Canada
Home equity is the part of your home you own. This page sets out how the Financial Consumer Agency of Canada (FCAC) says you can borrow against it, what it costs, and the risk to your home. It describes four products evenly and does not rank them.
What this term means: Home equity is the portion of your home that you own. The FCAC gives an example: a home worth $250,000 with a $150,000 mortgage balance has $100,000 in equity.[1]
How borrowing against equity works
The FCAC says your financial institution may allow you to borrow money secured against your home equity, which institutions may also call “equity release.”[1] It may use your equity to decide how much you may borrow.[1] You may need a home appraisal to determine the value of your home.[1]
The FCAC’s arithmetic example. For a home worth $250,000, 80% is $200,000. If you owe $150,000 on your mortgage, the maximum remaining amount you may borrow is $50,000.[1] This is the FCAC’s illustration, not a lending rule for any particular lender.
Costs and risks the FCAC lists
- You may need to pay administrative fees, including appraisal, title search, title insurance and legal fees.[1]
- You may have to pay a new mortgage loan insurance premium, and your lender may have to change the terms of your original mortgage agreement.[1]
- Your home acts as security for the equity you borrow.[1]
The four products, side by side
The table follows the FCAC’s own comparison. The percentages and descriptions are the FCAC’s general figures; the terms on offer depend on the institution, the product and your circumstances.
| Second mortgage | Home equity line of credit (HELOC) | Reverse mortgage | Home equity loan | |
|---|---|---|---|---|
| Credit limit | 80% of the appraised value, minus the balance of your mortgage[1] | 65% of the appraised value[1] | 55% of the appraised value, minus the balance of your mortgage[1] | 80% of the appraised value[1] |
| Interest rate | Fixed or variable; generally higher than on the first mortgage[1] | Variable; changes as market rates go up or down[1] | Fixed or variable; generally higher than on a mortgage[1] | Fixed or variable; generally higher than on a mortgage[1] |
| Access to the money | One lump sum deposited to your bank account[1] | As needed, using regular banking methods[1] | One lump sum, or in instalments[1] | One lump sum deposited to your bank account[1] |
| Fees listed | Appraisal, title search, title insurance, legal[1] | Appraisal, title search, title insurance, legal | Appraisal, title search, title insurance, legal | Appraisal, title search, title insurance, legal |
How the FCAC describes each
- Second mortgage. A second loan on your home with the same features as a mortgage; you keep paying your first mortgage while you pay it off.[1] Rates are usually higher than on first mortgages because they carry a higher risk for lenders.[1]
- HELOC. It works much like a regular line of credit: you can borrow whenever you want up to the credit limit, pay it back and borrow again.[1]
- Reverse mortgage. You must be a homeowner and usually aged 55 or older.[1] Interest accumulates, and the rate is typically higher than with a HELOC or a mortgage.[1] You do not need to make payments until the loan is due: when you move out, sell, the last borrower dies, or you default.[1]
- Home equity loan. You are given a one-time lump sum, may be up to 80% of your home’s value, and you pay interest on the total amount.[1] Once you repay it, you cannot borrow it again, and you repay fixed amounts of principal and interest on a fixed term and schedule.[1]
- Borrowing back prepaid amounts. If you made extra payments, your institution may let you re-borrow them; it will typically add the amount to your mortgage balance, which increases your interest costs.[1]
Our guide to Canadian reverse mortgage regulation covers that product in more detail. The United States has similar products under different rules; see HECM, HELOC and home equity loans.
How to verify this yourself
Read the FCAC page in the reference list; it is the source for every statement above, including the percentages. Then ask your financial institution for its own limit, rate type, fees and repayment terms for any product you are considering, in writing. The FCAC also refers you to your financial institution for the home equity financing options available to you. Our published standard covers US loan originators only; there is no Canadian Register.
What this page does not cover
This page is general information, not financial or legal advice. It does not say which product, if any, suits anyone, and it names no lender. It does not cover tax treatment, the stress test, or provincial rules for brokers and lenders; see our guide to the stress test and province-by-province matrix. Limits and rates vary by institution. The FCAC page details are dated 15 October 2025. This page was last reviewed 3 October 2026.
Your next step
Before you borrow against your home, ask your financial institution for the limit, rate type, fees and consequences of default in writing for each product it offers. Return to the Mortgage help library for related guides.