Equity Take-Out

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.

• 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

• Home Equity
• Refinance
• HELOC
• Loan-to-Value Ratio (LTV)
• Second Mortgage