Home Equity in Quebec: How Much Can You Access?

As you pay down your mortgage or your property value changes, you build home equity. Depending on your situation, that equity may become a source of financing for refinancing, renovations, debt consolidation or another important project.

The amount you may actually be able to access depends on the value accepted by the lender, your existing secured debt, the financing product, your qualification and the lender’s criteria.

How Do You Calculate Home Equity?

Home equity is generally the difference between the current value of your property and the balance remaining on your mortgage.

If you also have a home equity line of credit, second mortgage or another debt secured by the property, that balance should also be subtracted for a more accurate estimate of your actual equity.

Simple formula: property value − mortgage balance = approximate home equity.

But having $450,000 in home equity does not mean you can necessarily borrow $450,000.

The amount that may actually be available depends on the value recognized by the lender, existing mortgage and secured debt balances, the financing product, your qualification and lender criteria.

Quebec’s Autorité des marchés financiers (AMF) defines property equity as the difference between the property’s market value and all debts secured by that value. Read the AMF information on mortgages.

How Much Home Equity Could You Actually Use?

With a traditional mortgage refinance, total financing can generally be structured up to approximately 80% of the lender-recognized property value, subject to qualification and lender criteria.

Using the previous example:

• Property value: $800,000
• 80% of the property value: $640,000
• Existing mortgage balance: $350,000
• Potential gross amount available: approximately $290,000

This is only an example. Mortgage penalties, appraisal costs, notary or legal fees and other applicable costs may reduce the net amount actually available.

The 80% figure is a general refinancing reference, not a promise of financing. The amount approved depends on the property value accepted by the lender, your financial profile and the lender’s underwriting requirements.

How Does Your Property’s Market Value Affect Your Home Equity?

Your home equity calculation depends directly on the value assigned to your property. That value may have increased or decreased since you purchased the property based on market conditions and the characteristics of the home.

Factors that can influence market value include:

• recent sales of comparable properties in your area;
• location and neighbourhood;
• property type, size and overall condition;
• lot size;
• renovations or improvements;
• supply and demand in the local real estate market.

Municipal Assessment, Market Value and the Value Accepted by the Lender

These values should not be confused with one another.

The municipal assessment value is primarily used for municipal and school taxation purposes. It is established according to the applicable assessment roll and does not necessarily represent what the property would sell for today.

The current market value is intended to reflect the price at which a property could reasonably sell under current market conditions.

For a refinance or other financing secured by the property, the value accepted by the lender for underwriting is what ultimately determines the financing amount that can be considered.

Can a Property Appraisal Be Required?

Yes. Depending on the lender, property type, amount requested and the characteristics of the file, an appraisal may be required to confirm the property value.

In some cases, the lender may use an automated valuation method or another form of value validation. In other cases, a full appraisal by a qualified appraiser may be required.

Who Pays for the Appraisal?

It depends on the lender and the type of financing. In some situations, a lender may absorb or reimburse the appraisal cost. In other cases, including some alternative financing situations, the borrower may be responsible for the cost.

In Quebec, there is no single official appraisal fee. The Ordre des évaluateurs agréés du Québec states that fees can vary according to the region, property type and purpose of the appraisal. It is therefore important to confirm the cost before proceeding.

Ordre des évaluateurs agréés du Québec — appraisal FAQ

What Can Home Equity Be Used For?

How Can You Access Home Equity?

There are several ways to use home equity. The right option depends on the amount needed, how you want to access the funds, your existing mortgage and your qualification.

These limits are general references, not a promise of financing. Available products depend on the lender-recognized property value, existing secured debt, your qualification and lender criteria.

Learn more about mortgage refinancing →
Compare HELOC options →

Before You Use Your Home Equity

Accessing home equity is not only about the value of the property. The lender must also determine whether the new financing meets its qualification requirements.

Depending on the situation, you may need to consider:

• the property value accepted by the lender;
• your current mortgage balance;
• your income and financial obligations;
• your ability to qualify;
• the penalty to change or repay the existing mortgage;
• appraisal costs;
• notary or legal costs;
• applicable lender, administrative or setup fees.

The goal is not simply to determine how much you can borrow, but also whether the transaction actually improves your financial position.

Benefits and Risks of Using Home Equity

Thinking About Using Home Equity to Buy Another Property?

You may also want to review my resources on investment properties and vacation homes.

Investment Properties →

Vacation Homes →

Do Not Confuse Home Equity With a Gift of Equity

A gift of equity is different from accessing equity accumulated in your own property.

In some transactions between family members, part of a property’s value may be used toward the buyer’s down payment as a gift of equity.

Some lenders may accept this structure, but requirements vary. Depending on the lender and the file, an appraisal, proof of the family relationship, a gift letter, evidence of equity or wording in the purchase agreement may be required.

A gift of equity should therefore be reviewed as a separate down-payment strategy rather than as a withdrawal of equity from your own property.

Frequently Asked Questions About Home Equity in Quebec

How do I calculate the equity in my home?

Subtract all debts secured by the property from its current value. This can include your mortgage, a home equity line of credit and other secured loans. For example, a property worth $800,000 with $350,000 in secured debt has approximately $450,000 in equity.

How much of my home equity can I actually access?

The amount you can access is not equal to all of your equity. With many traditional refinance structures, total mortgage-secured financing is generally limited to approximately 80% of the lender-recognized property value, subject to qualification, product and lender requirements.

Can I access home equity without refinancing my entire mortgage?

Possibly. Depending on your situation, a HELOC, second mortgage or another secured loan may allow you to access part of your equity without replacing the entire first mortgage.

Is an appraisal always required?

No. Some lenders may use automated valuation tools or another method of confirming the property value. In other situations, a full appraisal may be required depending on the property, amount requested and the characteristics of the file.

Can I use home equity to consolidate debt?

Yes, in some situations. Refinancing may allow higher-interest debts to be paid with financing secured by the property. However, the total cost, mortgage penalty, fees, amortization and long-term effect on your debt should be compared before deciding.

Will using home equity increase my payments?

Not in exactly the same way in every case, but borrowing more increases your debt. Your payment will depend on the financing product, amount borrowed, interest rate, amortization and structure selected.

Content prepared by Thelma Pareras Varela, licensed mortgage broker in Quebec — AMF licence #277417.

This page provides general information. Financing availability, borrowing limits, rates, fees and qualification criteria vary by lender, product and borrower situation.

How Much Home Equity Could You Actually Access?

Your property value is only one part of the calculation. I can help you review your mortgage balance, goals and financial situation to determine which options may be available.

Review My Home Equity Options