HELOC Calculator Canada

📋 Canadian HELOC Rules at a Glance

How a Canadian HELOC Works

A Home Equity Line of Credit (HELOC) lets Canadian homeowners borrow against the equity they've built in their property. Unlike a second mortgage (which gives you a lump sum), a HELOC is a revolving credit line — you borrow what you need, when you need it, and repay at your own pace. Interest accrues only on the amount you've drawn.

Under OSFI's B-20 guideline, Canadian lenders are restricted to a maximum HELOC of 65% of the home's appraised value. If your HELOC is bundled with a mortgage (a readvanceable mortgage), the total of both cannot exceed 80%. As you pay down the mortgage, your available HELOC room increases automatically.

HELOCs are interest-only — you're only required to make interest payments each month. This makes them very flexible but also means the principal balance doesn't shrink unless you actively pay it down. Because rates are variable (tied to Prime Rate), your monthly payment changes when the Bank of Canada adjusts rates.

HELOC Calculator — Frequently Asked Questions

The two limits: 65% and 80%

Under OSFI's B-20 guideline a standalone HELOC is capped at 65% of your home's value. You may borrow up to 80% combined when a HELOC is bundled with a mortgage — but anything between 65% and 80% must be in an amortising portion that you are required to pay down. Only the first 65% can be revolving credit you draw and repay at will.

This is why a lender's "you qualify for $400,000" often turns out to be mostly mortgage rather than available line. Ask specifically what the revolving limit is. Note also that HELOCs above 80% do not exist at federally regulated lenders — mortgage default insurance is not available on a HELOC, so there is no insured route above that line.

Interest-only minimums are the real risk

A HELOC's minimum payment is typically interest only. Pay exactly the minimum and the balance never falls — you can carry the same debt for a decade and owe precisely what you started with. The payment feels manageable precisely because it is accomplishing nothing.

The rate is also variable, tied to prime, so your payment moves with every Bank of Canada decision. And because a HELOC is secured against your home, this is not ordinary consumer debt: default risks the house. Converting unsecured credit card debt into a HELOC lowers the rate but raises the stakes — and unlike credit card debt, HELOC debt cannot be settled in a consumer proposal.

When the interest is tax-deductible

Canada has no mortgage interest deduction for a home you live in. But HELOC interest is deductible when the borrowed money is used to earn income — buying investments that produce income, funding a rental property, or financing a business.

The test is use of funds, not what the loan is secured against, and the tracing must be clean. Mixing deductible and personal borrowing in one account makes the deduction very difficult to substantiate, so a separate HELOC sub-account for investment borrowing is the standard approach. Get advice before relying on this — the CRA scrutinises interest deductibility, and leveraged investing magnifies losses just as it magnifies gains.

Sensible uses, and the demand clause

A HELOC works well as an emergency fund substitute (arranged before you need it, costing nothing when unused), as bridge financing between buying and selling, and for renovations that add value. It works badly for consumption — vehicles, holidays, or anything that depreciates faster than you repay.

One clause worth reading: most Canadian HELOCs are demand facilities, meaning the lender can reduce your limit or call the balance, particularly if property values fall or your circumstances change. It is uncommon, but it means a HELOC is not a guaranteed line you can count on indefinitely. Arrange it while your income is strong rather than when you need it. See our HELOC guide for the full comparison against refinancing.