Home Equity Loan Calculator
Calculate monthly payments for a fixed-rate home equity loan (second mortgage).
Loan Details
Monthly Payment
$595.01
Home Equity Loans in Canada
A home equity loan (also called a second mortgage) lets you borrow a lump sum using your home equity as collateral. Unlike HELOCs, these loans have fixed rates and fixed payments.
How Home Equity Loans Work
- Lump Sum: Receive full amount upfront
- Fixed Rate: Interest rate locked for entire term
- Fixed Payment: Same payment every month
- Closed Loan: Cannot re-borrow paid amounts
- Term: Typically 5-20 years
Home Equity Loan vs HELOC
| Feature | Home Equity Loan | HELOC |
|---|---|---|
| Disbursement | Lump sum | As needed |
| Interest Rate | Fixed | Variable |
| Payment | Fixed (P+I) | Interest-only min |
| Best For | One-time expense | Ongoing needs |
Common Uses
- Major home renovations
- Debt consolidation
- Education expenses
- Business startup capital
- Large one-time purchases
Eligibility Requirements
Equity: At least 20% equity in your home
Credit: Good credit score (650+)
Income: Stable, verifiable income
Debt-to-Income: Total debt payments under 42-44% of gross income
Disclaimer
This calculator provides estimates. Actual rates, terms, and payments vary by lender and borrower qualifications. Your home is collateral - failure to repay could result in foreclosure. Consult with mortgage professionals before borrowing.
FAQ
What is a home equity loan?
A home equity loan is a lump-sum loan secured by your home equity, with a fixed interest rate and fixed monthly payments over a set term (typically 5-20 years).
Home equity loan vs HELOC?
Home equity loans: lump sum, fixed rate, fixed payments. HELOCs: revolving credit, variable rate, interest-only minimums. Choose loans for one-time needs, HELOCs for ongoing access.
How much can I borrow with home equity?
In Canada, you can borrow up to 80% of your home's value minus your mortgage. For example, with a $500K home and $300K mortgage, you could borrow up to $100K.
Are home equity loan rates higher than mortgages?
Yes, home equity loans typically have higher rates than first mortgages (0.5-2% higher) because they're second-position liens, meaning higher risk for lenders.
Is home equity loan interest tax deductible?
In Canada, home equity loan interest is only deductible if funds are used for income-producing investments. Personal use (renovations, debt consolidation) is not deductible.