Ways to Access Home Equity in Ontario: 4 Options Explained
TL;DR: The main ways to access home equity in Canada are a refinance or HELOC, a reverse mortgage, a no-payment mortgage and a second mortgage. No single option is best for everyone. Your income, credit, equity, age and the reason you need the money decide which ones are open to you.
- Borrowing against your home costs money, so compare at least two options before you commit.
- Some options need monthly payments. Others let interest build, which lowers the equity you keep.
- A short-term plan and a long-term plan usually point to different products.
- Talk to a licensed broker, and to an accountant or lawyer for tax and estate questions.
On October 20, 2026, MonsterMortgage.ca, a mortgage broker serving homeowners across the GTA, hosted a live panel called “You’re Holding a Full House” on the main ways to access home equity. This post covers what our experts said and answers the questions you sent in. It is a summary, so watch the full recording for more detail.
The four ways at a glance
Here is how the main ways to access home equity compare. Rules and costs vary by lender and are subject to change.
| Option | Who it suits | How much you can borrow | Monthly payments | Main trade-off |
|---|---|---|---|---|
| Refinance or HELOC | Homeowners with income who want flexible or lower-cost borrowing | Mortgage up to 80% of home value. Standalone HELOC up to 65% (OSFI) | Yes. A HELOC is interest-only on what you use | Needs income and credit approval. A refinance may trigger a penalty |
| Reverse mortgage | Homeowners where every borrower on title is 55 or older | Usually up to 55% of current home value, depending on age and property (FCAC) | None required. Interest is added to the balance | Equity shrinks over time. Costs are higher |
| No-payment mortgage | Homeowners who want a transitional loan and have a plan to exit | Varies by property and lender | None. Interest is added to the balance | Short term, with a plan to repay. Not always renewable |
| Second mortgage | Homeowners who need money fast and for a short time | Varies by lender. Sits behind your first mortgage | Depends on the loan | Higher rates and fees than a first mortgage |
A table can only compare products, and your age, income, credit and equity decide which options are open to you. Talk to a mortgage broker at MonsterMortgage.ca and we will review your situation.
Refinance or HELOC: the familiar route
If you have steady income and good credit, a refinance or a HELOC is often the lowest-cost way to access home equity. Both go through a bank or a broker, and both are priced like regular mortgage products.
A refinance replaces your current mortgage with a new, larger one, up to 80% of your home’s value. A home equity line of credit (HELOC) is a credit limit secured by your home. You borrow what you need, pay interest only on what you use, and can repay at any time without a penalty. A standalone HELOC is capped at 65% of your home’s value, and a mortgage plus a HELOC together cannot go above 80% (OSFI Guideline B-20). Those caps apply to federally regulated lenders, and other lenders may set their own limits.
Two practical points came up on the panel. First, a HELOC has no restrictions on how you spend it, but it is a demand facility. That means the lender can review it, change the limit or ask for payments. Our panel said this is uncommon, and it is worth knowing before you rely on it. Second, if you break a mortgage early to refinance, ask for the penalty in writing before you decide.
On rates, our broker Karen Mann shared an approach for borrowers who want variable pricing: take the variable rate, but make payments as if the rate were fixed. At the time of the webinar, fixed rates sat more than one percentage point above variable. Rates change often, so confirm today’s numbers with a broker.
Reverse mortgage: no payments, but the balance grows
A reverse mortgage turns part of your equity into cash without monthly payments, and in exchange your equity shrinks over time. It is built for homeowners aged 55 and older, and it is one of the main ways to access home equity in retirement.
In Canada, you can usually borrow up to 55% of your home’s current appraised value. The exact amount depends on your age (and the age of the youngest borrower on title), plus the home’s type, condition and location (FCAC). The interest is added to your balance, so the amount owed grows each year. You keep ownership of the home, which must be your primary residence. The loan is repaid when you sell, move out or the last borrower passes away. A lump-sum advance typically starts around $25,000 (FCAC).
Suzy Fernandes-Arruda of HomeEquity Bank, which offers the CHIP Reverse Mortgage, also noted that optional payments are possible. If the balance ever grows past the value of the home, the lender takes that risk.
If only one owner is 55 or older, the couple does not qualify for a reverse mortgage. They can still look at the other three options, depending on income, credit and equity.
No-payment mortgage: a bridge with an exit plan
A no-payment mortgage lets you borrow against your home with no monthly payments, but it is designed as a short-term bridge, not a permanent solution. The interest is added to your balance, and you need a plan to repay it, usually by selling, refinancing or using other funds.
Nicole Nixon of Fraction explained how their product works. There is no age requirement, and the lender looks at your equity, credit and household income to confirm you can keep up with property taxes. Terms run up to about five years. They are not renewable, so you would need to sell, refinance or pivot to another lender when the term ends. Fraction told us early repayment carries no penalty or discharge fee.
As of October 2026, rates for this product ran from the low 5s to the low 7s, depending on credit score and loan-to-value. Rates are subject to change. Fraction is the company name, not a product category, and other lenders structure their products differently. We work with more than one lender, so we compare your options.
Second mortgage: fast, short and higher cost
A second mortgage is a loan registered behind your first mortgage, and it costs more because the lender takes more risk. It usually runs for about 12 months and works best when you have a clear next step.
Our partner Kristian Harris described three common uses. The first is to rebuild credit and then refinance back to a bank. The second is to buy out a spouse after a separation. The third is to fund construction. Open terms let you pay the loan out at any time. Our own lending arm, Monster Capital, also offers in-house financing. You can read more about private mortgage options on our site.
What decides which ways to access home equity are open to you
No two files are the same. Karen summed up what lenders weigh in five areas:
- Income: whether you can carry the payments, or the property tax and upkeep on a no-payment loan.
- Credit: your credit score affects both approval and the rate.
- Equity: the gap between your home’s value and what you owe.
- Age: a reverse mortgage requires every borrower to be 55 or older.
- Goals: what the money is for, and how long you need it.
A short-term goal, such as a bridge to a sale, usually points to a different product than a long-term plan, such as supplementing retirement income.
Every file is different. Contact MonsterMortgage.ca to have a broker review your income, credit and equity and show which of these routes are open to you.
What the panel cautioned
Tom Reber, a portfolio manager at Raymond James, raised three points that apply to every option that lets interest build.
- Equity falls as interest grows. What you leave to your family shrinks. Talk to them before you decide.
- Get legal advice. Estates can be complicated when a loan is attached to the home.
- Think about where the cash comes from. If you also hold savings, draw from the lower-tax pocket first. Most TFSA withdrawals are not taxed (CRA), and the amount you withdraw is added back to your contribution room on January 1 of the next year (CRA). RRSP withdrawals are taxable income. Ask your accountant how this fits your plan.
Questions around ways to access home equity
Attendees sent in more questions than we could cover live. Here are short answers, grouped by topic. These are general answers. Every file is different, and talking it through with a broker gives you a more tailored analysis.
HELOC questions
Are there restrictions or a catch with a HELOC?
Once a HELOC is set up, there are no restrictions on how you use it. The one thing to know is that it is a demand facility, so the lender can review it or change the limit, although that is uncommon. If you borrow to buy an investment property, ask your accountant about the tax treatment.
Can I convert my HELOC into a mortgage?
Yes. You can convert a HELOC into a mortgage, and the mortgage rate is typically lower than the HELOC rate.
Can I get a standalone HELOC behind my Meridian mortgage?
Yes, standalone HELOCs exist behind a Meridian mortgage. They may cost more than arranging both with one bank, so compare the two.
Does a HELOC limit affect mortgage pre-approval?
It depends on the lender. Some count your full limit when they assess your income, and others do not. Ask before you apply.
Reverse mortgage questions
Who qualifies for a reverse mortgage, and how much can I borrow?
You can borrow up to 55% of your home’s current appraised value (not just your total home equity), depending on your age and the youngest borrower on the title. Every borrower is usually required to be 55 or older (FCAC, Reverse Mortgages). A lump sum typically starts around $25,000.
What if only one of us is 55 or older?
A reverse mortgage requires every borrower on title to be 55 or older, so a couple with one younger owner does not qualify. They can consider the other three options, depending on income, credit and equity.
I have a mortgage that is not up for renewal. Can I take a reverse mortgage now?
You would probably pay a penalty for paying out your existing mortgage early. Find out the amount before you decide. Both borrowers must also be 55 or older.
What is CHIP, and which reverse mortgage lenders do you work with?
HomeEquity Bank is the lender, and CHIP Reverse Mortgage is its product. We work with three reverse mortgage companies. Their rates and setup fees are similar, and the product features differ little.
When is the best time to take a reverse mortgage?
There is no best age. It depends on what the money is for and your long-term plans.
No-payment mortgage questions
Is “Fraction” a type of mortgage?
No. Fraction is the name of the company, not the product, and the product has no other name. It is not offered by every lender.
What do these mortgages cost?
Rates ran from the low 5s to the low 7s as of October 2026, based on credit score and loan-to-value, and they are subject to change. Typical costs are legal fees and an appraisal. In-house legal is about $700 to $800, a lawyer about $1,500 to $2,000, and an appraisal about $400 to $500.
Do I need a full-time job to qualify?
Not necessarily. Your equity matters most, but the lender wants to see household income that covers your property taxes. A broker can look at your situation.
What happens at the end of the term?
The term is the time horizon. A 3-year or 5-year term is not renewable, so you would need to sell or move to another lender by the end. If you have a mortgage now, check the penalty to break it first.
General questions
Which option is best, and how much equity can I take out?
We cannot say which is best without knowing your situation. How much you can take depends on the product you choose.
What is the best mortgage type right now, fixed or variable?
There is no right answer, and nobody knows what tomorrow brings. Events outside Canada, including in the US, can move markets quickly. Kristian Harris noted that the gap between fixed and variable was still over 1%, with variable under 4% and the five-year fixed close to 5%. Prime moves a quarter point at a time, so he did not expect a huge push on rates. He took a variable at his own renewal, but said a fixed rate makes more sense if the gap is small or if you expect prime to rise several times. Karen Mann added that the choice is client specific. If you can handle higher payments, take the lower-rate product and pay as if it were the higher rate. Rates are subject to change.
What should someone from Alberta consider when buying a vacation or income property in Ontario?
Regardless of the province you live in, the requirements for buying an investment property are the same. They depend on your down payment, income and credit. Taxes and closing costs can differ by province, so ask your broker and lawyer.
I bought a home for $395,000 and still owe $380,000. Can I access equity?
With about 4% equity, there is little to access. Equity grows as you pay down the mortgage and as values change.
Can I buy an income property with a mortgage?
Yes, many buyers do, and you do not have to live in the property. Down payment rules and how rental income counts vary by lender and property type. A broker can walk through your numbers.
Should I hold or sell my condos as a landlord?
Real estate has historically been a good long-term hold, but no one can predict today’s market. The decision depends on whether the rent covers your costs.
How should I decide whether to buy now?
Buy when you are financially ready. If you plan to close on two pre-construction homes a year apart, the question is whether you qualify for both mortgages.
What if my closing date is after my renewal date?
Renew into an open term with your existing lender. Open terms usually carry a higher rate, so ask what it costs.
If I need cash, is it better to take it from a TFSA, a line of credit or an RRSP?
Take the money from the pocket that attracts the least tax. That is often the TFSA, but it depends on your tax profile. If your other income is fully taxable, a reverse mortgage can keep the TFSA earning tax-free and give you a lower blended tax rate. A financial planner or accountant can run your numbers.
Watch the replay or talk to a broker
The recording lets you hear the panel discuss each of these ways to access home equity in their own words. Watch the webinar replay to hear the full discussion.
If you want to talk through your own situation, talk to a broker or call (416) 480-0234. As a mortgage broker in the GTA, MonsterMortgage.ca compares options across lenders and looks at your income, credit, equity and goals together, so you get an analysis built around your file.
This post is general information only and is not financial, mortgage, tax or legal advice. It does not consider your personal circumstances. Panelists speak from their own experience and their views are their own. Product availability, eligibility requirements, costs and rates vary by lender and are subject to change, and any borrowing is subject to approval. Borrowing against your home has costs, and interest on some products accrues and reduces your equity over time. For advice about your situation, talk to a licensed mortgage professional, and speak to a qualified accountant or lawyer for tax or legal questions.
