HELOC Calculator

What Is a HELOC?

A Home Equity Line of Credit (HELOC) is a revolving credit facility secured by your home. Unlike a traditional mortgage or home equity loan, a HELOC allows you to borrow funds as needed up to a pre-approved limit, paying interest only on the amount you actually use.

How Does a HELOC Work?

Your HELOC limit is based on your home's appraised value minus your existing mortgage balance. In Canada, most lenders allow you to borrow up to 80% of your home's value (loan-to-value ratio), less any outstanding mortgage balance.

• Revolving credit: Borrow, repay, and borrow again up to your limit — similar to a credit card but with much lower interest rates.
• Interest-only payments: Most HELOCs require interest-only payments on the drawn amount, keeping monthly costs lower.
• Variable rate: HELOC rates are typically variable, tied to the lender's prime rate.

HELOC for Debt Consolidation

One of the most popular uses of a HELOC is consolidating high-interest debt. By rolling credit card balances (often at 19%+ interest) into a HELOC at a much lower rate, homeowners can save thousands of dollars per year in interest charges while simplifying their monthly payments into a single payment.

Who Qualifies for a HELOC?

To qualify for a HELOC in Canada, you typically need:

• At least 20% equity: Your home's value must exceed your mortgage balance by enough to provide borrowing room.
• Good credit history: Most lenders require a minimum credit score, though requirements vary.
• Stable income: Proof of income sufficient to service the HELOC payments alongside your existing mortgage.