An equity take out is one of the most useful things a homeowner can do with the value locked in their home. Whether you are consolidating high-interest debt, covering a large expense, or bridging a tight stretch, an equity take out lets you access that value without selling. This guide explains what an equity take out is, how to calculate what you can access, the four ways to do one, and the 80% rule that governs all of them.
Short answer: An equity take out means borrowing against the equity you have built in your home, the difference between its market value and what you owe. You can do it through a refinance, a second mortgage, a HELOC, or a private home equity loan. Most lenders cap total borrowing at 80% of your home’s value, so your available take out is 80% of value minus what you already owe.
What Is an Equity Take Out?
An equity take out is simply borrowing against the value you have built in your home. Your equity is the difference between your home’s current market value and the total of any mortgages, HELOCs, or other loans registered on title. It is not an unsecured personal loan or line of credit, an equity take out is a property-secured loan registered against your home, so you must own real estate in Canada to qualify.
Worked example: a $700,000 home
With $440,000 owing against an $700,000 home, you sit at 63% loan-to-value. The 80% ceiling is $560,000, so you could potentially access up to $120,000 if you meet all underwriting requirements.
How to Calculate Your Available Equity Take Out
- Find your home’s current market value (recent comparable sales, or an appraisal).
- Add up all registered mortgages, HELOCs, and secured debts on title.
- Subtract that total from your home value, that is your equity.
- Multiply your home value by 80% to get the maximum allowable secured debt.
- Subtract your current balances from that 80% cap, that is your maximum equity take out.
You can run your own numbers with our home equity calculator.
The Four Ways to Do an Equity Take Out
1. Refinance
Replaces your existing mortgage with a larger one and advances the difference in cash. Best when you are near renewal or breaking your current term carries little penalty. See our mortgage refinance page.
2. Second mortgage
A separate mortgage registered behind your first. Ideal when you have a good first-mortgage rate you do not want to break, or need funds short-term. Learn more about second mortgages.
3. HELOC or home equity loan
A HELOC is revolving credit with interest-only payments; a home equity loan is a fixed-term, amortizing lump sum. Choose based on whether you need flexible access or a one-time amount.
4. Private home equity loan
When banks say no, private lenders focus on equity and property value rather than credit. Typically short-term, designed to bridge a difficult period until you requalify for traditional financing.
The 80% Rule That Governs Every Equity Take Out
Whichever route you choose, the same ceiling applies: total secured borrowing, your existing mortgage plus any new financing, generally cannot exceed 80% of your home’s value. On a $500,000 home that is $400,000 of total secured debt, so if you already owe $300,000, your maximum equity take out is $100,000.
Your income and credit are still reviewed, but with alternative and private lenders they are not the only factors. There are lenders who approve self-employed borrowers, clients with collections, or homeowners recovering from a consumer proposal, with the focus on the property, the equity position, and a clear exit strategy. According to the Financial Consumer Agency of Canada, home equity is one of the most powerful financial tools a homeowner can use, provided it is used responsibly.
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Using an Equity Take Out Responsibly
An equity take out is a powerful tool, but it must be used wisely, over-borrowing puts your home at risk if you cannot keep up with payments. That is why every file should be fully underwritten for sustainability, capped at 80% loan-to-value, and paired with a plan to improve your credit and cash flow so you can move back to a lower-cost mortgage over time. You will always receive a full Cost of Credit Disclosure before committing, so you know exactly what to expect.
The Bottom Line
An equity take out can be the bridge between financial stress and a fresh start, letting you access your home’s value to consolidate debt, cover a major cost, or stabilize your finances, without selling. The key is doing it within the 80% rule and with a clear exit plan. If you want to see what you qualify for, our team specializes in equity-based solutions for homeowners the banks have turned away.
