The Short Answer
Canadian homeowners can generally borrow up to 80 percent of a home's value in total, with the revolving home equity line of credit portion capped at 65 percent under OSFI Guideline B-20. On a Markham home worth $1.4 million with a $600,000 mortgage, that is roughly $520,000 of accessible equity. In September 2026 the Bank of Canada policy rate sits at 2.25 percent, prime is 4.45 percent, and a typical HELOC prices at prime plus 0.50 percent, or about 4.95 percent. A rental property requires at least 20 percent down because mortgage insurance requires owner occupancy. Interest may be deductible when the borrowed money is used to earn income, but only with clean tracing.
Want this applied to your own property? Call the Kaizen Real Estate Team at (647) 370-8885.
How Much Equity Can You Actually Access
Two limits govern this, and homeowners routinely confuse them.
The first is the 80 percent total loan to value limit for uninsured mortgage lending. That is the legal ceiling on what you can borrow against your home in total.
The second comes from OSFI Guideline B-20: the revolving, readvanceable portion is capped at 65 percent loan to value. Anything between 65 and 80 percent must be amortizing and non readvanceable. In plain terms, you can reach 80 percent, but the top slice has to behave like a mortgage with scheduled payments rather than a line you can redraw.
A Markham example
Take a detached home in Wismer Commons appraised at $1,400,000 with a $600,000 mortgage remaining.
- 80 percent of $1,400,000 = $1,120,000 total borrowing capacity
- Less the existing $600,000 mortgage = $520,000 in accessible equity
- Of that total, the revolving HELOC portion cannot exceed 65 percent of value, or $910,000, which after the existing mortgage leaves $310,000 as a revolving line
- The remaining $210,000 would need to be structured as amortizing debt
The Financial Consumer Agency of Canada adds two thresholds worth knowing. A standalone HELOC generally requires more than 35 percent equity. A HELOC combined with a mortgage requires at least 20 percent equity and must be held with the same lender.
Questions About Your Situation?
Every Markham property and every timeline is different. Call the Kaizen Real Estate Team at (647) 370-8885 and speak to a REALTORĀ® who works this market daily.
Where Rates Sit in September 2026
Rate | Level |
|---|---|
Bank of Canada policy rate | 2.25 percent, held September 2, 2026 |
Prime rate at the major banks | 4.45 percent |
Typical HELOC | About 4.95 percent, or prime plus 0.50 percent |
Competitive 5 year fixed mortgage | Roughly 4.09 to 4.29 percent |
Competitive 5 year variable mortgage | Roughly 3.30 to 3.65 percent |
The September 2, 2026 hold was the Bank's seventh consecutive decision to leave the policy rate unchanged. The next scheduled decision is October 28, 2026. Rates move, so treat these as a snapshot rather than a forecast.
Three Ways to Access Equity
Home equity line of credit
Revolving, interest only minimum payments, draw and repay as needed. Currently the cheapest flexible option at roughly prime plus 0.50 percent. Setup costs are modest, typically an appraisal in the $300 to $500 range and legal fees where a new charge is registered. Best for a buyer who wants funds ready but does not need them all at once.
Refinance
Replaces your existing mortgage with a larger one and takes the difference in cash. Usually the lowest rate of the three, but it triggers a prepayment penalty if you break mid term, plus legal and appraisal costs. Best when your existing rate is not materially better than today's.
Second mortgage
Sits behind your first mortgage, lump sum, materially higher rate. Fastest to arrange. Best where breaking the first mortgage would cost more than the rate premium on the second.
The penalty question
On a variable rate mortgage, the prepayment penalty is three months' interest. On a fixed rate mortgage it is the greater of three months' interest or the interest rate differential. The IRD compares your contract rate to the lender's current rate for a comparable remaining term, applied to your balance over the time remaining. It grows large when your rate sits well above today's rates. Get the exact figure from your lender in writing before deciding between a refinance and a HELOC.
Neeraj Moolchandani on Keeping the Borrowing Clean
Neeraj Moolchandani, REALTORĀ® at Kaizen Real Estate, raises one structural point with every client planning to use equity for an investment purchase. Keep the investment borrowing in its own line or sub account. Mixing a kitchen renovation and a rental down payment in a single HELOC destroys the tracing that interest deductibility depends on.
Neeraj is careful to keep that in its lane. It is a structuring point, not tax advice, and the conversation belongs with an accountant before the funds move rather than at filing time. What the order of operations does affect is which property you can buy and how quickly, and that part is worth planning around.
Using Equity to Buy the Next Property
This is where Markham homeowners with substantial equity most often want to go, and where the rules tighten.
A second home you will live in
Canada Mortgage and Housing Corporation insurance requires owner occupancy by the borrower or a related person living there rent free, with a maximum property value of $1.5 million. Where that applies, the minimum down payment is 5 percent on the first $500,000 and 10 percent above it.
A rental or investment property
A non owner occupied rental cannot be insured under that program. That is why the practical minimum down payment on a rental is 20 percent. Equity from your Markham home is a common source for it.
Rental income and qualifying
Lenders treat expected rent one of two ways. The offset method reduces the property's carrying cost in your debt service calculation. The add back method adds a portion of the rent to your qualifying income. Add back is generally more generous. Treatment varies widely by lender, roughly 50 to 70 percent offset at insured A lenders, 50 to 80 percent at conventional A lenders, and often higher at B lenders and credit unions. This single variable can change what you qualify for by a large margin, so it is worth shopping.
The stress test still applies
For uninsured mortgages, the minimum qualifying rate is the greater of your contract rate plus 2 percent, or 5.25 percent. A refinance is new underwriting and is stress tested. Banks also stress test HELOC applicants. A straight switch at renewal between federally regulated lenders, with no increase in amortization or loan amount, is exempt.
Turn Markham Equity Into the Next Property
Owners who bought before 2020 are often sitting on more accessible equity than they realise. The Kaizen Real Estate Team will map the purchase and the financing together.
The Tax Question, Handled Carefully
Interest on borrowed money may be deductible under paragraph 20(1)(c) of the Income Tax Act where the interest is paid under a legal obligation, the amount is reasonable, and the borrowed money is used for the purpose of earning income from a business or property.
Three points matter for a homeowner using a HELOC.
- It is the use of the funds that governs, not the security pledged. A line secured by your Markham home can support deductible interest if the money is used for an income producing purpose.
- Tracing is on you. The Supreme Court's decision in Ludco Enterprises Ltd. v. The Queen (2001) places the onus on the taxpayer to trace borrowed funds to an identifiable eligible use.
- Keep it separate. Use a dedicated HELOC sub account for investment borrowing. Mixing a kitchen renovation and a rental down payment in one account destroys clean tracing, and the Canada Revenue Agency will apportion or deny.
Borrowing solely to acquire something that can only ever produce a capital gain does not qualify. Michael John Lau, a REALTORĀ® serving home buyers and investors in Markham, Ontario, is not a tax advisor, and this is a conversation to have with your accountant before the funds move, not after.
What This Looks Like in Markham
Markham's average sale price was $1,208,692 in August 2026, with detached homes averaging near $1.61 million. Owners who bought in Berczy Village, Wismer Commons, Markham Village or Milliken Mills before 2020 are frequently sitting on several hundred thousand dollars of accessible equity without realizing the number.
What they do with it varies. Common uses among Markham homeowners include a down payment on an investment condominium, funding a move up purchase before selling, helping an adult child into a first home, or financing a renovation that adds a registered second suite.
Each of those has a different structure, a different rate and a different tax treatment. The order of operations matters more than the product name.