Trying to figure out your home equity financing options? If you own a home in Canada and have built up equity, you have more than one way to borrow against it — and the right choice depends on how you need the money and how you plan to repay it. This guide walks through the main home equity financing options, how they compare, and how to qualify, even if a bank has turned you down.
What Are Your Home Equity Financing Options?
Home equity is the difference between what your home is worth and what you still owe on it. Once you have built up enough, you can borrow against it — and in Canada, you can generally access up to a combined 80 percent of your home’s value, counting your existing mortgage and the new borrowing together.
There are three main home equity financing options, and each suits a different need:
- Home equity loan: a one-time lump sum with fixed payments
- Home equity line of credit (HELOC): a revolving line you draw, repay, and reuse
- Refinancing: replacing your existing mortgage with a larger one and taking the difference in cash
Approval is based mainly on your equity and your property, not just your credit score — which is why alternative and private lenders can often help when a bank cannot.
Home Equity Loan
A home equity loan gives you a lump sum upfront, usually at a fixed rate, repaid over a set term. It sits behind your existing first mortgage, so your current mortgage stays untouched.
It suits a defined, one-time need — consolidating high-interest debt, funding a renovation, clearing tax arrears, or covering a large expense — where you know exactly how much you need and want predictable payments. For the basics, see our guide to what a home equity loan is.
Home Equity Line of Credit (HELOC)
A HELOC is a revolving line of credit secured against your home. You are approved for a limit, draw only what you need, pay interest only on the balance you use, and the room becomes available again as you repay it — much like a credit card, but at a far lower rate.
It suits ongoing or unpredictable costs, or a standby buffer, where you want flexible access rather than a single lump sum. The rate is usually variable, so payments can move with interest rates.
Home Equity Loan vs HELOC: How to Choose
The core difference is a lump sum versus revolving access. A home equity loan gives you certainty — a fixed amount and fixed payments. A HELOC gives you flexibility — borrow as needed, repay, and reuse. If your need is one-time and defined, the loan usually fits. If it is ongoing or uncertain, the HELOC usually fits. For a full side-by-side, see our detailed home equity loan vs HELOC comparison.
How Much Can You Borrow?
Whichever option you choose, your room is based on your equity and the 80 percent combined ceiling. On a home worth $600,000 with a $400,000 mortgage, 80 percent of the value is $480,000, which leaves up to $80,000 of potential room, subject to lender policies. Use our home equity calculator to estimate your own figure.
Qualifying With Bad Credit or No Income
The big banks apply strict federal lending rules and often decline homeowners with bruised credit or hard-to-document income. Alternative and private lenders work differently — they focus on your equity and your property, which is why homeowners the banks turn away can often still qualify. If that is your situation, we have dedicated guides on a bad credit home equity loan and a home equity loan with no income.
How Turnedaway.ca Can Help
We shop the whole market for you — banks, credit unions, trust companies, and private lenders — and match your situation to the right home equity financing option and lender. Our common-sense lending approach has been working for clients for over 30 years. Apply online or call 1-855-668-3074 for a free consultation. We can approve homeowners in 24 to 48 hours.
Home Equity Financing Options FAQs
What are my home equity financing options in Canada?
The main options are a home equity loan (a lump sum with fixed payments), a HELOC (a revolving line you draw and reuse), and refinancing your existing mortgage. Each suits a different need, and you can generally access up to a combined 80 percent of your home’s value.
Which is better, a home equity loan or a HELOC?
Neither is automatically better — it depends on your goal. A home equity loan suits a one-time, defined need with predictable payments, while a HELOC suits ongoing or unpredictable costs where you want flexible access.
Can I access home equity financing with bad credit?
Often yes. Alternative and private lenders approve based mainly on your equity and property rather than your credit score, so homeowners the banks decline can frequently still qualify if they have enough equity.
How much can I borrow against my home?
Generally up to a combined 80 percent of your home’s value, minus your existing mortgage. The exact amount depends on your equity and the lender.
