Canadian Borrowing Habits Are Changing and Equity Is Leading the Shift

Not long ago, most Canadians treated home equity like fine china: nice to have, but best left untouched. Fast forward to 2025, and that mentality is shifting. Quietly, but quickly.

As interest rates settle into a new normal and real estate markets stabilize across the country, a growing number of homeowners are realizing that their greatest financial asset isn’t locked in an investment portfolio. It’s sitting beneath their roof.

This isn’t just about refinancing. It’s about strategic equity access.

A Shift From Saving to Leveraging

Canadian households have traditionally taken a conservative approach to borrowing. But rising home values over the last decade have changed the equation. Home equity has become more than a net worth line item, it’s a tool.

In today’s financial climate, homeowners are using equity to:

Consolidate high-interest debt
Fund major renovations
Support family with tuition or caregiving costs
Invest in small businesses or income properties
Create flexible emergency buffers without disrupting long-term savings

What’s important is not just how much people are borrowing, but why. The focus is shifting from lifestyle spending to long-term strategy.

Why Equity Is the Borrowing Engine Now

In a 2024 study by the Canada Mortgage and Housing Corporation (CMHC), mortgage growth slowed across the country, but alternative lending (including home equity-based borrowing) saw a measured uptick. That’s no coincidence. As homeowners hold onto fixed-rate mortgages they secured during the low-rate era, they’re turning to equity as a more efficient way to borrow without refinancing their entire loan.

Equity-based lending allows for:

Lower interest rates than most unsecured loans
No need to break an existing mortgage (and pay penalties)
Faster approval timelines and streamlined processes
Greater control over cash flow, especially with interest-only payment options. And it’s catching on: According to a Statistics Canada report released on August 14, 2024, HELOCs accounted for 77.8% of all non-mortgage loan balances in early 2024, significantly outpacing credit card debt.

It’s a tactical move, not a desperate one.

Who’s Borrowing and Why It Makes Sense

This new wave of borrowers doesn’t fit the old mold of struggling homeowners or overextended borrowers. In many cases, they’re:

Dual-income households with solid credit
Retirees looking to free up cash without selling
Investors wanting to scale real estate portfolios
Self-employed professionals using equity to fuel business growth

What unites them is mindset. They’re not borrowing to survive. They’re borrowing to move forward on their terms.

Debt Consolidation Without the Headache

One of the most popular use cases is debt consolidation. Canadians who’ve accumulated debt on high-interest credit cards or unsecured loans are now using home equity solutions to fold everything under a lower-rate structure.

It’s not just about saving on interest, it’s about gaining predictability. Fixed payments, one timeline, and less mental overhead.

In many cases, this means working with brokers or lending partners who understand both the borrower’s financial situation and the real estate landscape. That’s where companies like 360lending.ca have stepped in, offering customized solutions designed to tap into existing home value while keeping the process simple and transparent.

Renovation, Not Relocation

Another reason Canadians are turning to equity? They’re choosing to renovate instead of relocate.

With housing supply tight in many metro areas and moving costs soaring, upgrading your current home is often more cost-effective than buying new. Homeowners are using equity to:

Add rental units to offset mortgage payments
Create office or flex spaces to support hybrid work
Make accessibility improvements for aging in place
Boost resale value with updated kitchens, bathrooms, or energy-efficient features

These are not vanity projects. They’re value-building investments, made possible by capital already locked in the home.

How It Works

Borrowing against home equity usually happens in two main ways:

Home Equity Line of Credit (HELOC):
A revolving line of credit that lets you borrow as needed and only pay interest on what you use. Flexible, but interest rates can be variable.
Second Mortgage or Home Equity Loan:
A lump sum loan secured by your home equity with fixed payments over a set term. Great for debt consolidation or funding large, one-time expenses.

To qualify, lenders generally look at:

Loan-to-value ratio (LTV): Typically up to 80% of your home’s appraised value
Credit score: The higher, the better (though some flexibility exists)
Proof of income: Stability and ability to repay
Equity available: Based on your current mortgage balance and home value

Borrowers should also factor in legal fees, appraisals, and possible broker costs, but in many cases, the long-term savings or value gained make these well worth it.

Risks and How to Borrow Smart

As with any secured loan, borrowing against your home comes with responsibility. Your house is collateral. If you default, the consequences are serious.

That’s why experts recommend:

Having a clear repayment plan from day one
Borrowing only what’s necessary
Avoiding short-term fixes for long-term issues
Working with professionals who understand both financial risk and real estate dynamics

Used wisely, home equity can be an incredible asset. Used recklessly, it can compound financial stress.

The Bottom Line: The Mindset Shift Is Here

Canadians are no longer treating home equity as off-limits. They’re treating it as a powerful, practical tool for financial control.

Whether it’s paying off high-interest debt, reinvesting into your home, or building a more flexible future, equity is no longer just the fine print in a mortgage statement. It’s at the center of how today’s homeowners are navigating change and leading the shift toward smarter borrowing.