Home Equity
How does a HELOC work in Canada?
Key mechanics:
- Limits — a standalone HELOC caps at 65% loan-to-value; combined with your mortgage it cannot exceed 80% LTV.
- Rate — variable, usually prime + 0.5% to prime + 1%, and it moves the month the Bank of Canada moves.
- Payments — interest-only minimums, which is why balances often sit for years. Principal is repayable any time without penalty.
- Qualifying — you are stress-tested at the greater of contract rate + 2% or 5.25%.
HELOCs are cheap money secured by your home; missed payments put the property at risk. They suit renovations, bridge financing and emergency reserves far better than ongoing lifestyle spending.
Related Questions
How does a HELOC work in Canada?
A home equity line of credit lets you borrow revolvingly against up to 65% of your home's value (80% combined with your mortgage), at a variable rate tied to prime, paying interest only on what you draw.
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