Equity Take-Out for a New Real Estate Investor in BC

Challenges: Unlocking Equity as a New Investor

Michael, a self-employed contractor in British Columbia, owned a rental property outright but was still renting his own home. The rental brought in about $2,600 per month, and he believed it was worth close to $340,000 after renovations. Almost all of his wealth was tied up in this one property, and he wanted to use it to grow a small portfolio through a BRRR-style strategy.

His main issue was how to structure a self-employed mortgage in BC so he could pull out equity while still qualifying with a major Canadian bank. On paper, he looked strong as a landlord but weaker as a traditional borrower:

• He was self-employed through his contracting company, earning around $53,000–$57,000 per year based mostly on dividend income.
• He had very little in savings outside of a vehicle and work equipment.
• His credit score sat near 670, affected by high credit limits and recent over-limit use.
• He carried about $13,000 in unsecured debt.
• His personal rent was listed differently in various documents, at both $750 and $1,000 per month, which could create questions at underwriting.

On the property side, there were also important lender concerns. The tenancy agreement listed a different name as landlord than the name on title, which the lender would likely question. The lender also needed to understand where the down payment money had come from when he purchased the rental a few years earlier.

Another key risk was the valuation. Tax assessment showed a much lower value than Michael’s estimate, and any refinance or equity take-out would be anchored to the lender’s appraisal, not his best guess. If the appraisal came in low, his maximum loan amount and HELOC size would shrink, limiting how much capital he could pull out for the next property.

Michael did not only want a one-time payout. He wanted a lasting structure: a readvanceable mortgage he could use for investing, and a lending relationship that would support his long-term plans to buy more doors, including potential 4–12 unit buildings in growing BC markets.

Solutions: Structuring a Readvanceable Mortgage

The first step was to see what Michael could reasonably qualify for under standard 39/44 debt service guidelines. Using his two-year average net income and grossing it up by 15%, we tested his ratios with and without his $13,000 in unsecured debt. The numbers worked best if that higher-interest debt was paid off from the refinance proceeds.

Because he planned to hold and grow a portfolio, we did not just look at a simple refinance. A readvanceable mortgage—a combination of an amortizing mortgage and a home equity line of credit (HELOC)—would give him a flexible pool of capital that could grow as he paid down the mortgage.

We compared options from several major Canadian banks and alternative lenders. We focused on:

• Overall interest cost between fixed and variable choices
• Penalty structures, in case he restructured again after further renovations
• Which lenders allowed a readvanceable product at 80% loan-to-value on a rental property

Michael chose a readvanceable product from a major Canadian bank with the following key terms:

• Mortgage amount: $100,000
• Rate/term: 2.20% variable (Prime – 0.25%) for 5 years
• Amortization: 30 years
• Monthly payment: $379.20

• HELOC limit: initially approved at $172,000 at Prime + 0.25%

The plan was for Michael to draw $100,000 for a long-term investment, use part of the funds to clear his unsecured debts, and keep the remaining HELOC room available for future opportunities.

To satisfy conditions, we:

• Prepared and sent the commitment and disclosure package for e-signature.
• Ordered an appraisal through a national appraisal firm.
• Coordinated with his lawyer/notary for closing and registration.
• Set up a pre-authorized debit agreement and void cheque for the monthly payments.
• Confirmed his income and verified that all CRA taxes were up to date.
• Clarified the rental situation and documented the rental income appropriately.

The appraisal came in at $328,000 on an “as if complete” basis, lower than his personal estimate but within a reasonable range. At 80% loan-to-value, that supported total secured lending of about $262,400. To fit inside that cap, the final HELOC limit was adjusted down to roughly $162,400 while keeping the $100,000 mortgage in place.

With the structure finalized and conditions satisfied, the file proceeded to instruct the lawyer and moved toward funding.

Results: Capital for Growth and a Scalable Structure

The refinance funded smoothly with the major Canadian bank. Michael ended up with a clean, investor-friendly structure that unlocked capital from his existing rental without forcing a sale.

Key results:

• $100,000 mortgage in place: He accessed a significant chunk of equity at a competitive variable rate, with a payment of $379.20 per month over a 30-year amortization.
• Large HELOC capacity: With a HELOC limit around $162,400, he gained a flexible, revolving borrowing base he can tap into for down payments, renovations, or joint venture opportunities.
• Debt consolidation opportunity: His $13,000 in unsecured debt can now be addressed within the lower-rate secured structure, improving cash flow and cleaning up his credit profile over time.

Most importantly, this readvanceable mortgage aligned with his long-term investing goals. As he pays down the mortgage portion, his available HELOC room can grow, giving him an ongoing source of capital to fund the “buy, renovate, rent, refinance” cycle on future properties.

With this new financing in place, Michael shifted his focus to scaling up. He began to review 4–12 unit properties in a growing BC market, exploring both solo purchases and joint ventures. He was no longer limited by the equity locked in a single small rental—he now had a structured way to leverage that equity into a broader portfolio.

This file shows how a self-employed borrower in BC can use an equity take-out and readvanceable mortgage to move from owning one mortgage-free rental to actively building a multi-property portfolio, all while keeping risk and cash flow in balance.