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Infograph: Home Equity Loans vs. Mortgages

Kristian Juanas

25 Mar 2020 Home Equity Loans

home equity loan vs mortgage infograph

Home Equity Loans:

  • Home equity loans are designed for existing homeowners rather than those looking to purchase a first property. This is because home equity loans use the borrower’s equity in their home as collateral.
  • There is some flexibility in the amount you qualify to borrow with a home equity loan. Some private lenders will provide loans up to 90% of the loan to the value of the house. The more equity you have in your home, the greater your borrowing capacity becomes.
  • Fixed rate home equity loans are repaid over a set period with a constant interest rate throughout the lifespan of the loan. A home equity line of credit works similarly to a credit card where borrowers can withdraw funds as needed and make monthly payments at current interest rates. 


  • Mortgages can be leveraged whether you're purchasing a first property or not. A mortgage is simply a loan for a large sum of money. As it's paid back, homeowners begin to build equity in their property.
  • Banks will generally lend up to 80% of the home's purchase price. Unlike home equity loans, your current equity will not play a role in determining your borrowing capacity.
  • Mortgage interest rates can be either fixed (borrower pays the same rate throughout the term of their mortgage) or variable (varies as market interest rates change). In Canada mortgage terms can last from 6 months to 10 years, with a 5-year term being the most common.