Ownership and equity
Equity
The difference between what your home is worth and what you still owe on it.
Equity grows in 2 ways: your balance falls as you make payments, and your home's value rises or falls with the market. You only control the first.
You can use it through a refinance, a home equity line of credit or a second mortgage. Regulated lenders cap a refinance at 80% of value and a standalone revolving line at 65%. You can reach 80% combined if the portion above 65% amortizes.
Equity is different from savings. You can't get at it quickly, it costs money to access, and accessing it turns an asset into a debt secured against your home. Sometimes that's the right move: consolidating 20% unsecured debt at 4% saves a lot. It's never free, though.
Lenders measure equity against an appraised value, not what you think the house is worth or what a neighbour's sold for.
Related terms
Loan-to-value (LTV)
The mortgage as a percentage of the property's value, which decides your insurance, your pricing tier and how much you can borrow.
Home equity line of credit (HELOC)
A revolving line of credit secured against your home, priced at prime plus a spread and capped at 65% of value on its own.
Refinance
Replacing your mortgage with a larger one and taking the difference in cash, capped at 80% of the property's value.
This definition describes how the term is used in Canadian residential mortgage lending. It’s general information, not advice on your file. Rules, thresholds and rates change. Where a figure is quoted, it’s current as of the date shown on the related guide.
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