Home Equity, HELOCs & Second Mortgages

Home equity is the difference between your property's current market value and the debt secured against it. Available borrowing is usually less than total equity because lenders set maximum loan-to-value limits.

A home equity line of credit is revolving credit secured by your home. Interest is charged on the amount used, and the rate is usually variable. Qualification and maximum limits depend on the lender and combined mortgage debt.

A second mortgage is an additional loan registered behind the first mortgage on the property. It can provide access to equity without replacing the first mortgage, but rates and fees are generally higher because the second lender takes more risk.

It may be useful when a homeowner needs short-term funds but breaking a favourable first mortgage would be costly, or when the borrower does not yet qualify for a full refinance. The total cost and exit plan should be compared carefully.

Potentially. Equity can sometimes be accessed through refinancing, a HELOC or a second mortgage, depending on qualification and available equity. Tax consequences of borrowing for investment should be discussed with a tax professional.

The lender may use an automated valuation, appraisal or other approved valuation method. For many refinance, alternative or private files, a full appraisal may be required.