5 Best Ways to Use Your Home Equity in Canada, Ranked by Cost (2026)

Your home equity is usually your cheapest source of borrowing, but the tool you choose makes a big difference to what it costs. Here are the 5 best ways to access home equity in Canada in 2026, ranked from cheapest to most expensive, with the trade-offs that decide which one fits your situation.

The short answer

Ranked by typical cost, the cheapest way to use home equity is a refinance or blend, followed by a HELOC, then a second mortgage, a reverse mortgage for homeowners 55 and older, and finally private lending as the most expensive but most flexible option. The right one depends on how much you need, how flexible you want the access to be, and whether you qualify with a traditional lender. The 5 options are:

• Refinance or blend your mortgage (cheapest)
• Home equity line of credit (HELOC)
• Second mortgage
• Reverse mortgage (55+)
• Private mortgage (most expensive)

1. Refinance or blend your mortgage

Refinancing replaces your mortgage with a larger one and gives you the difference in cash, almost always at the lowest available rate — making it the cheapest way to access a large lump sum. A blend-and-extend can sometimes add funds without a full break penalty. Best for big one-time needs like renovations or debt consolidation. Estimate the cost with the refinance calculator, or see how refinancing works.

2. Home equity line of credit (HELOC)

A HELOC gives you revolving, reusable access up to your limit — borrow, repay, and borrow again, paying interest only on what you use. It's slightly costlier than a refinance because the rate is variable and tied to prime, but the flexibility is unmatched for ongoing or uncertain needs like staged renovations or a cash buffer. A standalone HELOC is capped at 65% of your home's value. Compare options for a home equity line of credit and model payments with the HELOC payment calculator.

3. Second mortgage

A second mortgage sits behind your first, letting you tap equity without disturbing a low first-mortgage rate or paying a break penalty. It costs more than a refinance or HELOC because it carries more risk for the lender, but it can be cheaper overall when breaking your first mortgage would trigger a large penalty. Best for a fixed lump sum when your existing rate is excellent. Learn how a second mortgage works.

4. Reverse mortgage (55+)

A reverse mortgage lets homeowners aged 55 and older convert equity into tax-free cash with no required monthly payments — the balance is repaid when you sell or move. It's more expensive than the options above because interest compounds on the growing balance, but it can be the right fit for retirees who want to stay in their home and don't need to qualify on income. Borrowing limits are typically lower than a refinance and depend on your age and home value.

5. Private mortgage

A private mortgage is the most expensive way to access equity, carrying higher rates and lender fees, but it's also the most flexible — private lenders focus on the equity in your property rather than your credit score or income. It's a short-term solution for borrowers who can't qualify with a bank or alternative lender, or who need fast funding. The goal is usually to use it briefly, then refinance into a lower-cost option once your situation improves.

Frequently asked questions

What's the cheapest way to access home equity in Canada?

A refinance is usually the cheapest because it carries the lowest rate for a large lump sum. A HELOC is close behind and adds flexibility at a variable rate. See refinancing to compare.

How much of my home's equity can I borrow?

Generally up to 80% of your home's appraised value across all mortgages combined, minus your existing balance. A standalone HELOC is capped at 65% of value.

Is a HELOC or a second mortgage better?

A HELOC is usually cheaper and reusable, while a second mortgage avoids breaking a low first mortgage and gives you a fixed lump sum. Estimate HELOC payments with the HELOC payment calculator.

Can I access equity if I have bad credit?

Often yes, through a second mortgage or private lender that lends against your equity rather than your score, usually at a higher rate as a short-term bridge until you can refinance.

Want the cheapest option for your situation? Ask Maya, our AI mortgage advisor, for an instant read, or talk to an advisor who'll compare all five against your goal and show you the real numbers.