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How much equity can I borrow from my home? 

As you’re considering home equity loans to finance your personal goals or pay down your debt payments, be sure to calculate how much you’ll need. Determining your goals means knowing how much equity you can borrow from your home, and each lender has different offers.

Being responsible with your home equity 

Home equity loans are a simple way to borrow money, and how much to borrow depends on your financial needs. As recommended by the Government of Canada, lenders can give up to 80% of your home equity, depending on the lender’s criteria.  

As you think about a decision to get a home equity loan, you can do a few tasks to help you. 

  • Appraise your home—finding the exact market value of your home’s appraised worth and how much mortgage you need to pay can prevent incorrect estimations about your potential equity loan.   
  • Calculate what you need—decide its purpose before applying for the loan. Home equity loans are flexible, but specifying a reason lets you ask for the right amount of money. 
  • Use interest calculators—every lender has to be transparent about their interest rate and APR, and you can use the information they provide to estimate each monthly payment. From there, you can determine if it’s a financial obligation you can healthily maintain.  
A couple going through their loan application.

How soon can you pull equity out of your home?

You’ll be eligible to take into your home equity as soon as you have the minimum required amount of equity in your home. Equity loan lenders do not need to know the length of your ownership over the property. As long as you own 25% of your home, you can pull equity out of it. 

As for the speed of the application processes, it’ll be different for every lender. You could wait a few days to months to hear back about your approval results. With an alternative lender like Alpine Credits, you’ll get your application results and funds in a few days to a week.

How to calculate your home equity 

Finding how much your home equity is worth is a simple calculation. Your estimated equity is the appraised value of your home minus your outstanding mortgage balance. The more of your mortgage you’ve paid, the greater your equity will be. 

You can also look at the example below for a house worth $1,000,000 and an existing mortgage loan at $400,000.

home equity = appraised home value – outstanding mortgage balance

home equity = $1,000,000 -$400,000

home equity = $600,000

You can borrow up to 75% of your home equity at Alpine Credits. If the owner of the house with $600,000 equity applied for a loan, the calculation would look like the following.

home equity loan = home equity value x max%

home equity loan = $600,000 x 75%

home equity loan = $450,000

The owner of this home doesn’t have to withdraw a loan worth the total amount. Rather, they can see the potential financial support their home can provide.

Home equity options 

Ways to access home equity 

Traditional financial institutions and alternative lenders bring several ways to access your home equity to fund your goals. In each method, the amount you can borrow can also change.  

  • Reverse mortgage—more common with retirees, reverse mortgages allow homeowners to borrow from their home equity without selling the house.  
  • Home equity line of credit (HELOC)—home equity lines of credit use your equity value to determine your credit limit. You can continuously expense your purchase on your HELOC during the first phase. During the second phase, you’ll focus on repaying the outstanding balance.  
  • Home equity loan—a lump sum based on your home equity amount that you can use for any purpose, usually with a fixed interest rate.

Types of lenders 

Several institutions across Canada can help you with accessing your equity in the form of a loan, some of the most common lenders being the following.  

  • Traditional banks—your local bank is the standard place to find a loan; some offer home equity loans. While they have competitive interest rates, they frequently approve loans to people with higher credit scores and steady incomes.  
  • Alternative lenders—when the bank can’t be the solution, consider alternative lenders for additional financial support. One example is Alpine Credits, approving homeowners based on their equity rather than their credit history or income status.

Getting a home equity loan from Alpine Credits 

Home equity loans are worth more than standard personal loans with comparatively lower interest rates, and you gain access to several different opportunities. 

  • Credit card consolidation—home equity loans have lower interest rates than credit cards. If you have multiple cards and loans, you can use an equity loan to repay your balances, which allows you to focus on one payment for your loan. 
  • Entrepreneurial endeavours—business owners and entrepreneurs benefit from home equity loans because they can be just as valuable as business loans but with more flexible approval criteria.  
  • Additional property—buying another house means acquiring another valuable asset you can use to generate rental income. Getting another house requires a large down payment, and a home equity loan can supply that if you have enough equity.  

Home equity financing from Alpine Credits also offers a simple application and approval process.   

  1. Apply online—you can apply within a few minutes. You’ll be asked to provide your personal details and home equity but not your credit score or income. 
  2. Get application results—you’ll hear back about your application within 24 hours, unlike other lenders that can take months to process applications.  
  3. Receive funding—the money will be deposited into your bank account within three days after you hear you’re approved.  

You can borrow up to 75% of your home equity with Alpine Credits. With the appraised value of homes being potentially high across Canada, you could receive a significant amount of funding. By managing your finances well and borrowing only what you need, a home equity loan can help you achieve your goals.  

Apply now

Frequently asked questions

Traditional lenders usually require a minimum credit score 620 to qualify for a home equity loan. Alpine Credits is different because you do not need to meet a minimum credit score to be eligible for a loan. 

A home equity loan is also known as a second mortgage, so it can be refinanced like how you can refinance a first mortgage. You may benefit from refinancing if you see offers and interest rates that fit your financial situation 

The interest is tax-deductible if you use your home equity loan for business purposes or property rentals. You can speak with a tax advisor to understand how this works and applies to your own situation.