How much can I borrow with a HELOC?

Generally your mortgage and HELOC together cannot exceed a set share of your home's value, often around 65% to 80%. Your available HELOC is that limit minus your existing mortgage balance.

Is a HELOC interest rate fixed or variable?

HELOCs typically carry a variable rate tied to the prime rate, so your interest cost rises and falls as the prime rate changes.

What is the difference between a HELOC and a second mortgage?

A HELOC is revolving credit you can draw and repay repeatedly, while a second mortgage is usually a one-time lump sum with set payments. Both are secured by your home equity.

Mortgage Glossary

What is HELOC (Home Equity Line of Credit)?

A HELOC, or home equity line of credit, is a revolving line of credit secured against the equity in your home. In Canada you can typically borrow up to a set percentage of your home's value, draw funds as needed, repay, and borrow again, paying interest only on the amount you use.

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Quick answer

Also known as: home equity line of credit, HELOC

Key points

A HELOC is a revolving credit line secured against your home equity.
You can borrow, repay, and re-borrow up to your limit as needed.
Interest is charged only on the amount you actually use.
Combined mortgage and HELOC are usually capped at around 65% to 80% of home value.
HELOC rates are variable and typically tied to the prime rate.

HELOC (Home Equity Line of Credit) explained

A HELOC lets you tap the equity you have built in your home through a flexible, reusable credit line rather than a lump-sum loan. You can borrow, repay, and re-borrow up to your limit, and you pay interest only on the outstanding balance.

Canadian HELOCs are usually capped so that your combined mortgage and HELOC do not exceed a set share of your home's value, often around 65% to 80% depending on the structure. HELOCs carry variable interest, typically tied to the prime rate, so your costs rise and fall with rate changes.

What a HELOC (Home Equity Line of Credit) is for

A HELOC exists to give homeowners ongoing, flexible access to their home equity for things like renovations, consolidating debt, or covering large or unpredictable expenses, without re-applying each time they need funds.

How it can help you

A HELOC can be a lower-cost, flexible way to borrow because it is secured by your home, but the variable rate means costs can rise. Lenderoo lets you shop 40+ lenders for free so you can compare HELOC limits and rates before committing.

When it comes up

A homeowner planning a multi-stage renovation sets up a HELOC. They draw funds as each phase of work is completed, paying interest only on what they have used, rather than borrowing the full project cost upfront.

Example: borrowing against equity

Your home is worth $600,000 and you owe $300,000 on your mortgage, giving you $300,000 of equity. A lender allows your combined borrowing up to 80% of value, or $480,000.

That leaves room for a HELOC of up to $180,000 ($480,000 minus your $300,000 mortgage). If you draw $50,000 for renovations, you pay interest only on that $50,000, and as you repay it the credit becomes available to use again.

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Questions & answers

HELOC (Home Equity Line of Credit): frequently asked questions

Common questions Canadians ask about heloc (home equity line of credit).

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Related mortgage terms

Equity

The difference between a home's market value and outstanding mortgage balance

Read definition

Second Mortgage

An additional loan secured against a property that already has a first mortgage registered on its title.

Read definition

Prime Rate

The base lending rate banks use to price variable loans.

Read definition

Loan-to-Value Ratio (LTV)

The ratio of the mortgage amount to the property's value, shown as a percentage.

Read definition

Refinancing

Replacing your existing mortgage with a new one.

Read definition

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Find my best mortgage Explore the glossary

Mortgage Glossary

What is HELOC (Home Equity Line of Credit)?

Find my best mortgage Back to glossary

Quick answer

Also known as: home equity line of credit, HELOC

Key points

A HELOC is a revolving credit line secured against your home equity.
You can borrow, repay, and re-borrow up to your limit as needed.
Interest is charged only on the amount you actually use.
Combined mortgage and HELOC are usually capped at around 65% to 80% of home value.
HELOC rates are variable and typically tied to the prime rate.

HELOC (Home Equity Line of Credit) explained

What a HELOC (Home Equity Line of Credit) is for

How it can help you

When it comes up

Example: borrowing against equity

Your home is worth $600,000 and you owe $300,000 on your mortgage, giving you $300,000 of equity. A lender allows your combined borrowing up to 80% of value, or $480,000.

Have a question about heloc (home equity line of credit)?

Lenderoo shops 40+ lenders for free and matches you with a mortgage professional who explains every term — and finds your best rate.

Get pre-approved free Talk to an expert

Questions & answers

HELOC (Home Equity Line of Credit): frequently asked questions

Common questions Canadians ask about heloc (home equity line of credit).

Keep learning

Back to full glossary

Understand your mortgage with confidence

Lenderoo shops 40+ lenders for free and pairs you with a mortgage professional who keeps the jargon simple — and gets you a great rate.

Find my best mortgage Explore the glossary