If you want to borrow against the equity in your Ottawa home, for renovations, debt consolidation or an investment, you have three main options. Each has different costs, limits and risks.
Side-by-side comparison
| HELOC | Refinance | Second mortgage | |
|---|---|---|---|
| How it works | Revolving credit you draw on as needed | New first mortgage replaces the old one | Extra loan behind your first mortgage |
| Typical borrowing limit | Up to about 65% of home value (standalone), and combined with your mortgage up to about 80% | Up to 80% of home value | Combined loans often up to about 80%, sometimes more with private lenders |
| Rate | Variable, usually above prime | Fixed or variable mortgage rates | Higher than a first mortgage |
| Payments | Often interest-only on what you use | Principal and interest | Often interest-only, with a short term |
| Costs | Legal and appraisal costs may apply | Penalty on the old mortgage plus legal and appraisal | Lender and broker fees plus legal |
| Best for | Ongoing or flexible borrowing needs | Lower overall rate, large one-time needs | Avoiding a first mortgage penalty, or credit challenges |
When each option tends to make sense
- HELOC: You need flexible access to funds and can discipline yourself to repay.
- Refinance: The savings from a new rate or a consolidation outweigh the penalty and fees. See refinancing in Ottawa.
- Second mortgage: A refinance would trigger a large penalty or you do not qualify for a bank product. See alternative lenders.
Risks to understand
- Your home secures all of these, so missed payments can put it at risk.
- Variable rates can rise, and interest-only payments do not reduce the balance.
- Using home equity for spending can leave you with less flexibility later.
Frequently asked questions
Is a HELOC better than a refinance?
Neither is always better. A HELOC gives flexibility, and a refinance may give a lower fixed rate and structure. Compare total costs and your plans.
Do I have to pass the stress test for a HELOC?
Often yes, and lenders qualify you at a higher rate. Requirements vary by lender.
Can I have a HELOC and a mortgage at the same time?
Yes, many homeowners have a readvanceable mortgage or a separate HELOC, subject to combined borrowing limits.
Compare ways to use your home equity
Answer a few quick questions and we will connect you with a licensed Ontario mortgage professional. It is free to use and there is no obligation.
Get matched nowImportant: Ottawa Mortgages is an independent information and referral service. We are not a lender, mortgage broker or mortgage brokerage, and we do not give mortgage advice or make credit decisions. If you ask to be connected, your details may be shared with a licensed Ontario mortgage professional, who may compensate us. Rates, rules and eligibility change often. Confirm details with a licensed professional and official sources, and check any Ontario mortgage broker’s licence with FSRA. Read our full disclosure.