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The home equity loan rate in Canada

A home equity loan is a great way to tap into the equity in your home. Knowing Canada’s home equity loan rate can be helpful to you because understanding it can help you make more informed financial decisions. 

Learn more about home equity loans here. 

How home equity loan rates work 

Rates on a home equity loan work similarly to rates on regular loans. Every lender will offer a loan amount and an interest rate represented by a percentage, which indicates the amount of interest you will be charged over the term of the loan. The additional payment for the interest compensates the lender for the cost of lending money.  

Another important rate to keep in mind is the annual percentage rate (APR), which represents how much the loan costs in total. The APR is not separate from the interest rate; instead, it considers the interest rate and the associated fees.  One could think of APR as the annual rate paid above the repayment of the principal amount of the loan.  

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Home equity loan interest rates vs personal loan rates 

  Interest rate  APR 
Traditional banks  7-10%  7-10% 
Online lenders  23-49%  23-49% 
Alpine Credits home equity loan  9-12%  12-16% 

Though traditional financial institutions have the most competitive rates, they are known for having strict lending requirements, such as requiring a high credit score, stable income and the ability to demonstrate repayment capacity from applicants. Online lenders do not have the same strict criteria but have higher interest rates to offset the additional risk that makes repayment feel financially demanding for the borrower. 

Another good option is with Alpine Credits, who provide an alternative solution. Our interest rates are lower than those of other online lenders, and our eligibility criteria are more flexible than those of banks and some online lenders. Alpine Credits’ team is available to help homeowners access funding when the bank is not an option.

What’s a good home equity loan rate? 

As a home equity loan is typically a loan of additional equity from a property, it will naturally have interest rates that are higher than conventional mortgages. Generally, a good home equity loan rate can be between 8%-13%. These rates will fluctuate as the Bank of Canada’s prime rate fluctuates.

Factors that affect interest rates 

The interest rate the financial institution or lender offers can fluctuate depending on when you decide to get a loan. The interest is influenced by the following factors regardless of when you apply;  

Economic environment 

The global and national economy can affect the interest rates on your loans and mortgages. All countries’ economies are intertwined, and Canada’s economy will fluctuate as the world economy does. At a national level, significant economic growth can lead to overall higher interest rates.  

An example of the economy affecting interest is with a variable rate, which means that your loan’s interest could change while paying it. As the rate fluctuates, so will your payments towards the loan. Even though the economy can be unpredictable, periods of low interest rates can help you save money. 


The Bank of Canada sets the base prime rate for the country. The prime rate is the basis of most loans and credit cards, including mortgages.  While the prime rate is the baseline, the rate offered to borrowers increases based on the risk presented by the borrower (higher risk equates to higher rates). The Bank of Canada’s prime rate changes according to what the government thinks will control inflation and encourage growth in the economy.  

Loan-to-value (LTV) ratio 

Lenders assess potential borrower’s risk through their LTV ratio, where the value of the loan is measured against the value of the securing asset. In the context of home equity loans, the LTV is a percentage that represents the value of your loan against the value of your home.  

LTVs of 80% or higher are considered high-ratio mortgages and indicate that more financial risk is involved for the lender. To compensate for the risk, lenders may offer higher interest rates compared to those who have lower LTV ratios.

Mortgage position

First mortgages have different interest rates from second, third, or any following additional mortgage loans. If you get another mortgage while you’re still repaying your first one, the interest on the second one will be comparably higher. 

Like most other influences on interest rates, mortgage position has to do with risk, and lenders want to minimize that.

Personal factors 

Credit score, debt-to-income ratio, job tenure and income status can all play a role in the interest rate offered to individual borrowers. Those with lower credit scores, high debt-to-income ratios, and irregular income sources may be offered higher interest rates from traditional lenders. The size of the loan and the loan term are details that can influence what the lender offers you.

Home equity loan vs HELOC rates 

You’ll most likely run into HELOCs as you explore home equity lenders. Though a home equity line of credit also uses the equity value in your home to determine your credit limit, the rates each lender offers will vary from home equity loan rates.  

Another main difference between HELOCs and home equity loans is that HELOCs often offer variable rates. With changing monthly payments, it can be challenging to create a budget. Home equity loans have fixed rate options, which allows monthly payments to be more predictable. 

Importance of home equity 

Your home is a valuable investment that provides capital opportunity. As you pay your mortgage balance, you build equity and your wealth. With Alpine Credits, you can access that wealth quickly to help you meet your financial needs.   

Ways to use your home equity 

You can use home equity financing in multiple scenarios. They offer flexibility because the main qualifying factor is the value of your home equity, and you can use the funds for a variety of purposes. 

  • Credit consolidation—if you have several outstanding credit card charges and loans, a home equity loan can help you repay most, if not all, of them, reducing the number of payments you have each month and the total amount you have to pay each month. Doing so allows you to pay comparably less interest and start better financial habits.   
  • Home renovations—elevating your home’s comfort and updating its aesthetic can require a significant amount of financing, and home equity loans can provide it. The cost of the renovation goes back into the home, increasing its value.  
  • Business financing—whether you’re starting a business or expanding the one you have now, a loan from your equity is a reliable funding source. You’ll receive a loan that provides the funding you need while experiencing more flexible eligibility criteria.

Why choose home equity loans over HELOCs 

While you have different options to access your home equity, home equity loans differ from home equity lines of credit and offer the following advantages.  

  • Commonly, a fixed interest rate—the interest on your loan remains unchanged during the term of your loan,  unless you adjust the loan terms. Many people choose a fixed rate because of the stability and assurance that their monthly payments stay consistent.  
  • Predictable payment schedule—coupled with a fixed rate, steady monthly payments allow you to make a predictable financial plan. Since HELOCs always have variable interest rates, you may need to adjust your monthly payment.  
  • Flexible eligibility requirements—home equity loan lenders are less likely to use your financial history to determine your approval for a loan. HELOC lenders are usually financial institutions that use your creditworthiness, job tenure and verifiable debt repayment capacity to assess your approval.  
  • Potential tax benefits—home equity loans are a type of mortgage, so they have mortgage interest. If you use the loan to buy a rental property or invest in a business, you may be able to deduct the interest from any income earned.    

Home equity loans from Alpine Credits 

Finding a home equity loan is simple with Alpine Credits as long as you have paid for at least 25% of your home. You may be eligible for a loan of up to 75% of your home’s appraised value. The application only takes three steps, and you’ll receive approval on the same day.  

  1. Apply online—you can finish the application within a few minutes. You don’t have to provide your credit history or income, nor will the application affect your credit score. Most of all, your credit standing will not have a major effect on the interest rate we offer. 
  2. Approval —Alpine Credits processes applications quickly, so you’ll hear your application results within 24 hours. You’re eligible for approval if you have at least 25% equity in your property. 
  3. Receive funding—Alpine Credits will directly deposit the money into your bank account not long after you get approved. You can use it for your financial needs almost immediately.
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Frequently asked questions

You’ll need to own at least 25% of your home to qualify for a home equity loan. Homeowners who have spent more time building equity can tap into it within days of applying for Alpine Credits.

Depending on the lender, you can borrow up to 80% of your home equity and qualify for more if you have a strong credit profile. Alpine Credits allows homeowners to access up to 75% of their home equity, regardless of their credit score or income.  Alpine Credits offers loans up to $2 Million or more. 

Home equity loans can help your credit score. Taking a home equity loan towards your high-interest outstanding balances can increase your credit score by demonstrating your ability to repay your debts on time.  

Home equity loans are valuable financial tools, and they can help you consolidate debts, decrease your monthly interest payments, or make repairs on your home. They can be a good idea regardless of the economic environment, especially if they help you achieve your goals