Ontario Real Estate And Development Industry Hires And Promotions: July

Equity Take-Out

Learn what an equity take-out is in Canadian real estate, how it works, and how homeowners use it to borrow against property value for cash.

Equity Take-Out

May 22, 2025


What is an Equity Take-Out?

An equity take-out is a financial strategy in which a homeowner borrows against the built-up equity in their property, often by refinancing or securing a home equity loan.

Why an Equity Take-Out Matters in Real Estate

In Canadian real estate, equity take-outs are used to access cash for renovations, investments, education, or debt consolidation.

Common equity take-out methods include:
  • Refinancing the mortgage
  • Applying for a Home Equity Line of Credit (HELOC)
  • Obtaining a second mortgage

Lenders calculate the maximum amount that can be borrowed based on the property's current market value and outstanding mortgage balance. Most institutions allow borrowing up to 80% of the property’s appraised value.

Understanding equity take-outs helps homeowners unlock capital from their property without selling, while managing risks and repayment responsibilities.

Example of an Equity Take-Out in Action

A homeowner with $300,000 in equity refinances their mortgage to take out $75,000 for a major renovation project.

Key Takeaways

  • Accesses property equity as cash.
  • Used for major purchases or debt repayment.
  • Often involves refinancing or HELOCs.
  • Subject to appraisal and lender limits.
  • Increases overall mortgage balance.

Related Terms

Additional Terms

Recourse Loan

A recourse loan is a type of loan where the lender can pursue the borrower’s personal assets, beyond the collateral, in the event of default.. more

Pari Passu

A pari passu clause is a contractual provision ensuring that multiple creditors share equally in repayment priority from the borrower’s assets.. more

Non-Recourse Loan

A non-recourse loan is a type of loan where the lender’s only remedy in case of default is to seize the collateral property; the borrower is not. more

Net Operating Income

Net operating income (NOI) is the total income generated by a property after operating expenses are deducted but before taxes and financing costs.. more

Mechanic's Lien

A mechanic’s lien is a legal claim by a contractor, subcontractor, or supplier for unpaid work or materials provided for a property.. more

Lis Pendens

Lis pendens is a legal notice filed in the land registry indicating that a property is subject to ongoing litigation that may affect its title.. more

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Ontario Real Estate And Development Industry Hires And Promotions: July
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