- HELOC limit: up to 65% of value; combined with your mortgage, up to 80%.
- HELOC rates are usually prime plus 0.5% to 1%.
- Payments can be interest-only, so the balance doesn't shrink unless you pay it down.
- A readvanceable mortgage combines a mortgage and HELOC; the credit grows as you repay.
How does a HELOC work in Canada?
The lender registers a charge on your home and sets a credit limit. You draw by cheque, transfer or card, repay any time and borrow again. Interest is charged monthly on the balance.
How much equity do I need for a HELOC?
At least 20% equity. Your HELOC limit is the lower of 65% of the home's value and 80% of the value minus your mortgage.
HELOC vs home equity loan vs refinance
| HELOC | Home equity loan | Refinance | |
|---|---|---|---|
| Rate | Variable (prime +) | Fixed or variable | Lowest, fixed or variable |
| Payments | Interest-only possible | Principal + interest | Principal + interest |
| Re-borrow | Yes | No | No |
| Best for | Ongoing needs | One lump sum | Large amounts at renewal |
Is HELOC interest tax deductible?
Only when you use the money to earn taxable investment or business income. Interest on money used for personal spending isn't deductible. Ask a tax professional about your situation.
Frequently asked questions
Can I get a HELOC with bad credit?
Prime lenders usually want 650+. Some alternative lenders offer equity lines with lower scores at higher rates.
What are HELOC requirements in Canada?
At least 20% equity, qualifying income at the stress-test rate, and acceptable credit.
Is a readvanceable mortgage the same as a HELOC?
It's a mortgage with a HELOC attached under one registration; as you pay the mortgage down, the HELOC limit rises.
- FCAC: Home equity lines of credit (checked October 7, 2026)
- OSFI: Guideline B-20, residential mortgage underwriting (checked October 7, 2026)
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