HELOC in Canada: Home Equity Line of Credit Rates, Limits and Requirements
A home equity line gives you revolving access to your equity at a variable rate. Here are the loan-to-value limits that apply in Canada and what they mean in dollars.
Who a HELOC covers
- Owners with meaningful equity wanting flexible access rather than a lump sum
- Renovators who do not know the final number yet
- Investors using equity as a down payment elsewhere
What lenders look for on a HELOC file
| 65% standalone | The maximum for a pure home equity line with no mortgage component. |
| 80% combined | A HELOC can sit behind a mortgage up to 80% of the property value combined, but the revolving portion still cannot exceed 65%. |
| Interest-only payments | Most HELOCs require interest only, which keeps the payment low and the balance permanent unless you are disciplined. |
| Readvanceable mortgages | The line grows as the mortgage is paid down. Convenient, and it makes leaving that lender harder — which is rather the point. |
HELOC mortgage rates: what it costs
HELOCs price off prime, typically prime plus a half to a full point, and move the day prime moves. They are not on the fixed-rate board.
HELOC pricing is quoted as a spread over prime rather than as a posted rate, so it moves the day prime moves. A home equity line is open and interest-only: there is no term, no maturity date and no renewal. 16 lenders write one — create a free account to see who, and at what rate.
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HELOC by province
Land transfer tax, minimum down payment and typical prices differ by province.
HELOC vs home equity loan vs refinance vs second mortgage
Four different ways to turn equity into money, and they are not interchangeable. The right one depends on whether you need a lump sum or a limit, and on what breaking your existing mortgage would cost.
| HELOC | Home equity loan | Refinance | Second mortgage | |
|---|---|---|---|---|
| What you get | A revolving limit you draw on as needed. | One lump sum, repaid on a fixed schedule. | A new, larger first mortgage replacing the old one. | A separate loan sitting behind your first mortgage. |
| Interest | Variable, set against prime. You pay only on what you draw. | Usually fixed, on the whole amount from day one. | Whatever a first mortgage prices at today — normally the cheapest of the four. | Higher than a first mortgage, because it is in second position. |
| Does it touch your current mortgage? | No. | No. | Yes — and if you break mid-term, a penalty applies. | No. |
| Best for | Ongoing or unpredictable costs: renovations in stages, a buffer, tuition. | A single known cost, by somebody who wants a fixed payment and an end date. | A large need when your mortgage is near renewal anyway, so there is no penalty to pay. | A large need mid-term when breaking the first mortgage would cost more than the higher rate does. |
Combined borrowing against a home is generally capped at 80% of its value, and the revolving portion of that at 65%. The cheapest option is usually whichever one avoids a penalty.
HELOC mortgage questions
How much can I get?
Up to 65% of the property value as a revolving line, or up to 80% combined with your mortgage. On a $900,000 home with a $400,000 mortgage that is up to $320,000 of combined room.
Is a HELOC cheaper than a refinance?
The rate is usually higher, but there is no penalty and no legal cost to set one up alongside an existing mortgage. For an unknown or staged spend it is generally the better instrument.
Do I have to requalify?
Yes, and at the stress-test rate on the full limit rather than the drawn balance — which surprises people. A large unused line can also reduce what another lender will approve.
Will applying hurt my credit score?
A single mortgage enquiry has a small, short-lived effect. Several lenders pulling your bureau separately over weeks is worse than one broker pulling it once and taking that file to several lenders.
How long does this usually take?
A straightforward file takes a few weeks from application to approval. Alternative and private lending can move faster because less is being verified — sometimes days.
Have your equity looked at properly
When you are ready to do something with these numbers, we will introduce you to a licensed broker who can put the file in front of lenders. Nothing here obliges you to.
