Calculate your monthly payment and total interest on a home equity loan, and check your combined loan-to-value ratio.
Rates as of Q2 2025 (example)
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This calculator estimates the monthly payment and total interest on a home equity loan — a lump-sum loan secured against the equity in your home, separate from your existing mortgage — and checks your combined loan-to-value (CLTV) ratio, an important measure lenders use when approving these loans.
Your available equity is your home's value minus your existing mortgage balance. Your combined loan-to-value (CLTV) ratio compares your total secured debt (existing mortgage plus the new home equity loan) to your home's value — lenders typically limit this to around 80%. The loan itself is amortized using the standard formula to calculate your monthly payment and total interest.
Formula: Available Equity = Home Value − Existing Mortgage Balance. CLTV = (Existing Mortgage Balance + Home Equity Loan Amount) ÷ Home Value × 100. Monthly Payment = Loan Amount × [r(1+r)n] ÷ [(1+r)n − 1], where r is the monthly interest rate (Annual Rate ÷ 12 ÷ 100) and n is the number of monthly payments (Loan Term × 12).
Example: A home valued at CA$600,000 with an existing mortgage balance of CA$350,000 has available equity of CA$250,000. Taking a CA$50,000 home equity loan brings the combined loan-to-value (CLTV) ratio to about 66.7% — within typical 80% limits. At an 8% interest rate (example rate — enter your actual rate) over a 15-year term, the monthly payment would be roughly CA$478, with total interest of about CA$36,009 over the full term. (Note: this example is for illustration purposes only and does not represent a loan offer.)
A home equity loan is essentially a second mortgage — a separate loan secured against your home, in addition to your existing mortgage, providing a lump sum that you repay over a fixed term with regular payments, similar to the original mortgage. This differs from a Home Equity Line of Credit (HELOC), which provides revolving access to credit that you can draw on and repay flexibly (see our HELOC Calculator). Canadian lenders generally limit total secured borrowing against a home to 80% of its appraised value (the combined loan-to-value, or CLTV, ratio shown by this calculator) — exceeding this limit is uncommon without mortgage insurance. Home equity loan rates are typically higher than first mortgage rates, since the lender's claim on the property ranks behind the first mortgage in the event of default. Common uses include home renovations, debt consolidation (paying off higher-rate debt with a lower-rate secured loan — see our Debt Consolidation Calculator), or major expenses. If your goal is debt consolidation or a renovation and you're also open to changing your existing mortgage terms, it's worth comparing this option against a full refinance (see our Mortgage Refinance Calculator), which could potentially offer a lower blended rate on the combined amount.
A home equity loan provides a lump sum upfront, repaid through fixed regular payments over a set term - similar to a second mortgage. A HELOC (Home Equity Line of Credit) provides revolving access to credit up to an approved limit, which you can draw on, repay, and redraw as needed, often with interest-only minimum payments. A home equity loan suits a one-time, known expense, while a HELOC suits ongoing or uncertain borrowing needs. See our HELOC Calculator for the latter.
CLTV compares your total secured debt against your home (existing mortgage plus the new home equity loan) to your home's current value. Canadian lenders generally cap this around 80% - if adding a home equity loan would push your CLTV above this limit, the lender may decline the loan or limit the amount you can borrow.
A home equity loan ranks behind your first mortgage in the event of default - if the home is sold to repay debts, the first mortgage lender is paid first. This additional risk to the home equity lender is typically reflected in a higher interest rate compared to a first mortgage, though usually still lower than unsecured credit like personal loans or credit cards.
Yes, this is a common use - consolidating higher-rate debts (such as credit cards or unsecured personal loans) into a lower-rate, secured home equity loan can reduce your overall interest cost. However, this converts unsecured debt into debt secured by your home, meaning your home could be at risk if you're unable to make payments - consider this trade-off carefully, and compare options using our Debt Consolidation Calculator.
A home equity loan keeps your existing mortgage (and its rate and term) unchanged while adding a separate loan. Refinancing replaces your entire mortgage, potentially at a new blended rate covering both your original balance and additional funds. Refinancing may involve prepayment penalties on your existing mortgage, while a home equity loan does not affect your existing mortgage - compare both options, including any penalties, using our Mortgage Refinance Calculator.
In Canada, interest is generally tax-deductible only if the borrowed funds are used to earn investment or business income (the "direct use" test) - interest on funds used for personal purposes, such as a home renovation or paying off personal debt, is typically not deductible. This is a complex area of tax law - consult a tax professional about your specific situation and intended use of funds.
Disclaimer: The information, rates, and figures provided on this page are for educational and illustrative purposes only and do not constitute a loan offer or financial or tax advice. The default interest rate is a sample value and does not reflect rates currently available from any specific lender. Combined loan-to-value limits, qualification rules, and the tax deductibility of interest depend on individual circumstances and lender policies. Always obtain a personalised quote from a lender and consult a qualified financial adviser or tax professional before borrowing against your home.