Find the best HELOC mortgage rate in Canada

A home equity line of credit (HELOC) is a revolving line of credit that allows you to borrow against the equity you’ve built in your home. Unlike a traditional loan, a HELOC works more like a credit card, letting you borrow, repay, and borrow again as needed, up to your approved limit.

HELOCs come with variable rates that are lower than those on personal loans or credit cards, but slightly higher than mortgage rates. During the draw period, you’re only required to make interest payments on the amount you use. After that, the repayment period begins, and you'll start making monthly payments that cover both principal and interest.

What to look for in a HELOC product

When comparing your HELOC options, it’s important to understand the features that may vary from one lender to another:

• Minimum and maximum amounts: Some banks have minimum borrowing requirements, while others may not offer HELOCs at all. The maximum limit is typically 65% of your home’s value, depending on your equity and lender guidelines.
• Revolving balance: HELOCs let you borrow, repay, and borrow again without reapplying, as long as you stay within your credit limit. If your HELOC is combined with a mortgage, your available credit may increase automatically as you pay down your loan.
• Sub-divided lines: Some lenders allow you to split your HELOC into separate accounts. This is useful if you're using funds for different purposes, like investing, where interest could be tax-deductible and needs to be tracked separately.
• Option to convert to fixed: You can sometimes convert a portion of your outstanding borrowed HELOC funds to a fixed rate, which you will then pay like a standard mortgage.
• Second position HELOC: You don’t need to get your HELOC from the same lender as your mortgage. In this case, the HELOC is usually in "second position," meaning the lender gets paid after your primary mortgage holder if you default. Because of this added risk, second-position HELOCs often carry higher interest rates.

How do you qualify for a HELOC? 

Among the most attractive features of a HELOC loan is that you only have to qualify and be approved for it once. Then, you can use the funds in your HELOC anytime you choose. In order to qualify, you’ll need the following: 

• At least 20% equity in your home (or a minimum down payment of 20% if purchasing a house through a re-advancable mortgage)
• You would need a credit score of at least 680 to qualify for the best rates, and at least 600 to qualify at all for a HELOC
• Proof of income, such as recent pay stubs or tax documents (e.g., Notice of Assessment)
• A reasonable debt-to-income (DTI) ratio, generally between 40% and 50%, depending on the lender
• Proof of homeownership, including property details and mortgage information (balance, term, amortization)

You’ll also need to pass a stress test, much like you would when trying to obtain a mortgage. You’ll be stress tested at either the qualifying rate of 5.25% set by the Office of the Superintendent of Financial Institutions (OSFI), or your contract rate + 2%, whichever is higher.

How much can I get on a HELOC?

As per the Office of the Superintendent of Financial Institutions (OSFI), you can borrow up to 65% of your home’s value through a HELOC loan in Canada. However, your combined mortgage and HELOC balance can’t exceed 80% of your home’s total value. To find out how much you could access, calculate 80% of your home’s value, subtract your current mortgage balance to get your maximum HELOC borrowing amount. Lastly, make sure the result doesn’t exceed 65% of your home’s total value. 

Let's look at Henry, who owns a home valued at $600,000 and owes $200,000 on his mortgage.

In this example, Henry can access $280,000 through a HELOC, as it only equals 46.7% of his home's value and is thus well under the 65% maximum allowable amount permitted by OSFI. 

Economic updates that impact HELOC rates in Canada

The Canadian housing market had a slow start to 2025, as tariff concerns and economic uncertainty weighed on buyer confidence. As mortgage rates are now stable after seven rate cuts and two rate holds, home sales picked up slightly in June. Anyone shopping for a mortgage rate in Canada right now should be aware of the economic factors below.

CPI update

Canada’s annual inflation rate rose slightly to 1.9% in June, up from 1.7% in May and April, according to the latest CPI report from Statistics Canada. The uptick was largely due to higher vehicle prices, as a 25% U.S. import tariff continued to push up costs in the auto sector. However, there were signs of relief in other spending categories. Gas prices were down 13.4% compared to June 2024, and grocery price growth also slowed to 2.8% from 3.3%. Restaurant food prices eased slightly to 3.2%. Shelter costs also moderated, rising 2.9% year over year compared to 3.0% in May. Mortgage interest costs grew 5.6% – the 22nd straight month of deceleration – as the impact of the Bank of Canada’s rate cuts filtered through. Since June 2024, the Bank has lowered its overnight rate to 2.75%, down from a peak of 5%, easing mortgage rates. Despite the overall softness in inflation, the Bank of Canada’s core CPI measures remain elevated. The CPI-Median rose to 3.1% in June, while CPI-Trim held steady at 3.0%. With core inflation still above target and job market data showing ongoing strength, the BoC is expected to hold rates steady at its July 30th policy meeting. 

Types of home equity line of credit (HELOC)

In Canada, you can find two main types of HELOCs – combined and stand-alone – each with its own structure and repayment rules.

1. Home equity line of credit (HELOC) combined with a mortgage

Also known as readvanceable mortgage, this product is offered by most major financial institutions in Canada. It combines a traditional mortgage with a HELOC under a single credit limit. Key features: 

• You don’t have fixed repayment amounts on your HELOC; you only have to pay interest on the money you’ve used. 
• Your mortgage portion follows a set payment schedule with principal and interest. 
• Your HELOC limit can increase over time as your home equity grows (up to 65% of your home’s value)
  
  

2. Stand-alone home equity line of credit (HELOC)

A stand-alone HELOC is not tied to your mortgage. It’s a revolving line of credit secured against your home, available even if your mortgage is with a different lender. Key features: 

• The credit limit can be up to 65% of your home’s market value
• Unlike a combined HELOC, the credit limit of a stand-alone HELOC doesn’t increase as you pay off the principal of the loan.

 

What are the pros and cons of a home equity line of credit (HELOC)?

A HELOC can be a smart way to access low-interest credit, but it’s not without risks, especially since your home is used as collateral. Here are the top advantages and disadvantages of a HELOC.

Pros:

• Offers easy access to a large amount of credit.
• Lower interest rates than other types of credit, such as credit cards.
• You only pay interest on the amount that you actually use (not the entire amount available to you).
• You can pay back the entire balance at any time without incurring a pre-payment penalty fee.
• It’s a flexible line of credit with no set repayment schedule.
  
  

Cons: 

• Requires discipline for repaying the loan. Because there is no set repayment schedule you could find yourself in a lot of debt for a long time.
• A HELOC has a variable interest rate, meaning that it fluctuates along with your lender’s prime rate; should the Bank of Canada choose to raise the target for the overnight rate, your HELOC interest rate will rise accordingly.
• Transferring a HELOC to a different lender, if allowed, involves legal and administrative fees
• Since it’s secured by your home, the lender can take possession if you default and can’t work out a repayment plan. 

Should I get a HELOC or a personal loan?

If you're trying to figure out how to pay for something big, like finishing your basement, covering tuition, or clearing up high-interest debt, you might be torn between a HELOC and a personal loan. Both let you borrow money, but they come with very different rules, risks, and repayment styles.

If you’re still unsure between a HELOC and a personal loan, ask yourself:

• Will I need the funds all at once, or over time?
• Am I comfortable with a variable rate that could rise?
• Do I have enough equity in my home?
• Do I need predictable monthly payments?

A HELOC is ideal if you want flexibility, plan to borrow over time, and have at least 20% home equity. A personal loan may suit you better if you need a fixed lump sum, don’t want to use your home as collateral, or prefer a structured repayment plan.

Who has the best HELOC rates and features?

While interest rates are important, they're just one part of choosing the right HELOC. Features like minimum borrowing amounts, the ability to convert to a fixed rate, or whether you can hold the HELOC in second position can vary by lender. Use the HELOC rates comparison chart below to see how HELOC products from Canada’s Big Banks stack up. Keep in mind: many other lenders also offer HELOCs, so it’s worth shopping around to find the right fit for your financial needs.

For more information, check out these helpful pages:

• Best Mortgage Rates in Canada
• 5-Year Variable Mortgage Rates
• 5-Year Fixed Mortgage Rates
• How to Choose Between a Refinance, a HELOC and a Second Mortgage
• Variable or Fixed Mortgage Rates
• Mortgage Stress Test: Everything You Need to Know
• The Bank of Mom and Dad and Your Down Payment