How many residential mortgages can I have?

The number of mortgages you can have is unlimited. Rather, people are constrained by their capacity to manage several mortgages or their financial status. First and second mortgages are two mortgages that are typically held concurrently on a same property.

What is a second mortgage Canada?

Second mortgage is a second loan or funding you take on your residential property. Interest rates on second mortgages are usually higher than first mortgages and you need to pay both your mortgages at the same time.

What is a conventional mortgage Canada?

A conventional mortgage in Canada is a loan where the down payment is at least 20% of the property's purchase price. This means that the loan amount is 80% or less of the property's value.

How long can you mortgage a home in Canada?

In Canada, you can mortgage a home for 25 years. If you are a first-time buyer or purchasing a new build you can mortgage it for 30 years. These rules took effect on December 15, 2024.

Can I buy a home with less than a 20% down payment?

The minimum amount you need for your down payment depends on the purchase price of the home. If your down payment is less than 20% of the price of your home, you'll typically need to buy mortgage loan insurance. If you're self-employed or have a poor credit history, your lender may require a larger down payment.

Should I choose a fixed rate or variable rate mortgage?

Interest rates either rise or fall. But a study suggests that homeowners with a variable mortgage fair better than a fixed rate one.

28 May Home Equity Loans in BC: What They Are, How They Work, and When to Use Them

Posted at 12:27h in Home Equity Loan by Satbir Bhullar

Your home is more than just a place to live — it’s also one of your most powerful financial tools. If you’ve built up equity in your property, a home equity loan could help you unlock that value to achieve major financial goals.

For homeowners in Surrey, Abbotsford, and nearby areas in British Columbia, rising property values have created new opportunities to borrow against equity for renovations, education, debt consolidation, and even investing in other properties.

But tapping into your home’s value isn’t a decision to take lightly.

In this guide, we’ll explain:

What a home equity loan is
How it differs from a HELOC or refinancing
When it makes the most sense to use
What to watch for when borrowing against your home

What Is a Home Equity Loan?

A home equity loan is a type of secured loan that lets you borrow a lump sum using the equity in your property as collateral. It’s sometimes referred to as a second mortgage, because it’s registered behind your primary mortgage on title.

With a home equity loan, you’ll receive:

A fixed amount of money
A fixed interest rate (in most cases)
A set repayment schedule, often over 5–15 years

Unlike a HELOC, you cannot re-borrow funds as you repay. This makes a home equity loan ideal for one-time expenses that require a lump sum.

How Is Home Equity Calculated?

Your equity is the difference between your home’s current market value and the total amount you owe on your mortgage(s).

Example:

Home value: $900,000
Mortgage balance: $520,000
Available equity: $380,000
Maximum you can borrow (up to 80%): $200,000

In high-growth communities like East Abbotsford or Fleetwood (Surrey), homeowners often have more equity than they realize due to sustained price appreciation over the last 5–10 years.

Home Equity Loan vs. HELOC vs. Refinance

It’s important to understand the difference between these three options:

Feature	Home Equity Loan	HELOC	Mortgage Refinance
Funds received	Lump sum	Revolving line of credit	Lump sum
Interest rate	Usually fixed	Variable	Fixed or variable
Repayment schedule	Fixed	Flexible (interest-only OK)	Standard amortization
Use of funds	One-time need	Ongoing, flexible spending	Major restructuring or equity use
When ideal	Renovations, debt consolidation, tuition	Emergency fund, ongoing expenses	Lowering rate, restructuring mortgage

Why Homeowners in BC Are Using Equity Loans in 2025

Debt Consolidation

With interest rates on credit cards nearing 20%, many BC homeowners are using home equity loans to pay off unsecured debt and replace it with a much lower fixed-rate loan. This can free up hundreds of dollars per month in cash flow.

Home Renovations

Need a new roof, kitchen upgrade, or legal suite addition? A home equity loan provides a lump sum to fund renovations — and could increase your home’s value even more.

Education or Large Expenses

Funding post-secondary education, launching a business, or paying for medical treatments are all common reasons to use home equity as a financial bridge.

Bridge Financing for a New Home

If you’re buying before selling, a home equity loan may be used for short-term liquidity — especially in active markets like South Surrey or Clayton, where timing a sale and purchase perfectly can be tricky.

What Are the Requirements to Qualify?

To be approved for a home equity loan in BC, you’ll typically need:

At least 20% equity in your home
A strong credit score (ideally 650 or higher)
Stable income to show you can afford the new loan
A home located in a marketable area (urban/suburban preferred)

Lenders will also look at your Total Debt Service (TDS) ratio, ensuring your debts (including the new loan) don’t exceed 42–44% of your gross monthly income.

Private lenders may be more flexible but often charge higher rates and fees.

FAQs: Home Equity Loans for BC Homeowners

How much can I borrow with a home equity loan?

You can borrow up to 80% of your home’s appraised value, minus any mortgage balance you owe. For example, if your home is worth $850,000 and you owe $500,000, you may access up to $180,000, depending on your credit and lender policies.

Does a home equity loan affect my existing mortgage?

No — it’s typically registered as a second mortgage, which means it doesn’t change the terms of your primary mortgage. However, if you later refinance your first mortgage, both loans may need to be reviewed together.

What’s the difference between a second mortgage and a home equity loan?

They’re often the same. A home equity loan is a type of second mortgage because it’s registered behind your original loan on your home’s title. The terms “second mortgage” and “home equity loan” are used interchangeably in many cases.

Can I get a home equity loan with bad credit?

Possibly. Alternative and private lenders in BC offer home equity loan products to borrowers with lower credit scores, provided there is enough equity in the home. Keep in mind that interest rates and fees may be higher.

What is the interest rate on a home equity loan?

Rates vary depending on your lender, loan size, and credit profile. In 2025, most prime lenders offer home equity loans starting around 6%–8%, while private lenders may start around 9%–12%. Fixed rates are more common for home equity loans than HELOCs.

Risks to Consider Before Borrowing Against Your Equity

While home equity loans can be a smart financial tool, they aren’t risk-free.

You’re Putting Your Home at Risk

Because your property is collateral, failure to repay the loan can result in foreclosure.

You’re Increasing Total Debt

Using equity for non-essential spending (e.g., vacations, cars) could damage your financial health if your income drops or interest rates rise.

You May Face Fees or Prepayment Penalties

Read your contract carefully. Some lenders impose restrictions on early repayment or charge setup fees that reduce the net value of the loan.

Before you borrow, make sure the loan:

Solves a long-term issue (not just a short-term cash need)
Has a clear repayment plan
Is structured with a lender who explains the risks transparently

Local Market Insight: Using Equity in BC’s Fraser Valley

Home values in Abbotsford, Surrey, and Langley remain strong, even as the broader BC market stabilizes. This means many homeowners are sitting on significant untapped equity.

In areas like South Cloverdale, Clayburn Village, or Willoughby, where detached and townhome values exceed $900,000, a home equity loan can be a safe way to fund upgrades — such as adding a rental suite or modernizing your kitchen — which may even increase the property’s value over time.

Final Thoughts: Should You Use Your Home Equity?

If you’re a homeowner in BC with a stable income and clear financial goals, a home equity loan can be an efficient, lower-cost way to fund important life priorities — as long as you borrow responsibly.

It’s ideal for:

Paying off high-interest consumer debt
Investing in property improvements
Covering education or major life events
Structuring long-term wealth strategies

Thinking of using your home equity in Abbotsford, Surrey, or the Fraser Valley?
Let’s explore whether a home equity loan is the right move — or if a refinance or HELOC would better suit your goals.

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