HELOC in Canada: How It Works and What It Costs
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A HELOC, or home equity line of credit, lets you borrow against the equity in your home and pay interest only on what you use. In Canada, the rate is your lender's prime rate plus a margin, and the major banks' prime rate is 4.45% as of October 18, 2026. This guide explains how a HELOC works, how much you can borrow, what the big lenders charge, and where the risks sit. For the rest of our home financing coverage, see the Ratesopedia mortgages hub.
A HELOC is cheaper than most unsecured credit because your home secures it. That same security is the main risk: if you cannot repay, the lender can act on your property. Read the limits and the fees before you sign.
What is a HELOC?
A home equity line of credit is a revolving credit account secured by a charge registered on your home. You get a credit limit, you draw money when you need it, and you can repay and borrow again without reapplying. Interest applies only to the balance you carry.
Most HELOCs in Canada come in two forms. A standalone HELOC sits on its own, with no mortgage attached or alongside a mortgage held elsewhere. A combined HELOC is bundled with your mortgage under one registered charge, often called a readvanceable mortgage. Examples include the RBC Homeline Plan, the Scotia Total Equity Plan (STEP), the TD Home Equity FlexLine, the BMO Homeowner ReadiLine and the National Bank All-In-One account.
In a combined plan, every mortgage payment that reduces your principal can free up room on the line of credit. That feature is convenient. It also means your available credit can grow over time, which takes discipline.
How much can you borrow with a HELOC?
Federally regulated lenders follow Guideline B-20 from the Office of the Superintendent of Financial Institutions (OSFI). The guideline caps the revolving, non-amortizing portion of a home loan at 65% of the home's value. A mortgage plus a HELOC can reach 80% of the value, but anything above the revolving cap must be an amortizing loan, such as the mortgage itself.
The Financial Consumer Agency of Canada (FCAC) states the equity requirement plainly. You need more than 35% equity for a standalone HELOC, and 20% equity for a HELOC combined with a mortgage.
Two quick examples
Take a home appraised at $600,000. The limits work out as follows:
- Standalone HELOC, no mortgage: up to $390,000 (65% of $600,000).
- Combined with a $300,000 mortgage: total borrowing capped at $480,000 (80%), so up to $180,000 of HELOC room.
- Combined with a $420,000 mortgage: total cap of $480,000 leaves $60,000 of room.
Your lender can approve less than these maximums. It also checks your income, your debts and your credit history, and it qualifies you at a stress-tested rate.
How HELOC rates work
Almost every HELOC in Canada carries a variable rate. The FCAC notes that the rate is typically your lender's prime rate plus a margin, for example prime plus 1%. When the Bank of Canada changes its policy rate, banks usually move their prime rate within a day, and your HELOC rate follows.
The Bank of Canada has held its policy rate at 2.25% since October 29, 2025, and the major banks have kept their prime rate at 4.45% since October 30, 2025. The next rate announcement is on October 28, 2026. Our guide to fixed vs. variable mortgages explains how prime moves through to variable products.
HELOC rates at Canadian lenders
The table below shows what each lender published on its own website on October 18, 2026. Your actual margin depends on your credit profile, your equity and the size of the line.
| Lender | Product | Rate formula | Rate as of Oct. 18, 2026 |
|---|---|---|---|
| RBC | RBC Homeline Plan (line of credit) | RBC prime + 0.500% | 4.95% |
| National Bank | All-In-One account | Prime + 1.00% | 5.45% |
| Tangerine | Tangerine Home Equity Line of Credit | Tangerine prime ± adjustment set in your agreement | 5.95% |
| Scotiabank | ScotiaLine Personal Line of Credit (STEP) | Varies with Scotiabank Prime; minimum limit $10,000 | Not published |
| BMO | Homeowner ReadiLine | BMO prime + adjustment factor | Not published |
| TD | TD Home Equity FlexLine | TD Prime + margin | Not published |
What a HELOC costs each month
Many HELOCs require only the interest each month. That keeps the payment low, but the balance does not shrink. Here is the monthly interest on a $50,000 balance, calculated as balance × rate ÷ 12:
- At 4.95% (prime + 0.50%): about $206 per month.
- At 5.45% (prime + 1.00%): about $227 per month.
- At 5.95% (prime + 1.50%): about $248 per month.
Each 0.25-point change in prime adds or removes about $10 a month per $50,000 owed. To see what paying down the balance faster would save, try the debt payoff calculator.
Fees to expect
Setting up a HELOC is rarely free. The FCAC lists home appraisal fees, legal fees to register the charge, title search fees, administration fees and, at some lenders, monthly fees. Ask for every fee in writing before you sign, and ask whether the lender covers any of them.
Risks of a HELOC
A HELOC is flexible credit backed by your home. The main risks are the following.
- Your home is the collateral: if you cannot repay, the lender can enforce its charge on your property.
- The rate moves with prime: a higher prime rate raises your cost the following month. The payment shock calculator shows what higher rates do to a home loan payment.
- Interest-only minimums: the minimum payment never reduces the balance, so the debt can stay for years.
- Credit that refills itself: in a combined plan, room grows as you pay down the mortgage, which makes overspending easy.
- Terms set by the lender: read the agreement to see when the lender can change your margin or reduce your limit.
HELOC vs. home equity loan
A home equity loan gives you a lump sum and a fixed repayment schedule. A HELOC gives you a revolving limit and, usually, an interest-only minimum. The comparison below sums up the differences.
| Feature | HELOC | Home equity loan |
|---|---|---|
| How you get the money | Revolving limit, draw as needed | Lump sum at closing |
| Interest rate | Usually variable: prime + margin | Fixed or variable, set at closing |
| Minimum payment | Often interest only | Principal and interest |
| Reuse | Repay and borrow again | One-time; reapply to borrow more |
| Cap at federal lenders | Revolving portion up to 65% of home value | Total home borrowing up to 80% of home value |
If you need a single large amount and want it paid off by a set date, a fixed loan or a mortgage refinance can be the better fit. The mortgage refinance calculator shows what a new payment would look like.
When a HELOC makes sense
A HELOC works best when you need money in stages and can repay it on a plan.
- Staged renovations: you draw money as invoices arrive and pay interest only on what is outstanding.
- A backup for large, irregular costs: an unused line costs nothing in interest, beyond any set-up or account fees.
- Replacing higher-interest debt: it works when you stop using the cards you paid off and repay the line on a schedule.
- Short-term bridge financing: when you know exactly where the repayment money will come from, and when.
How to apply for a HELOC
- Check your equity. Estimate your home's value and subtract your mortgage balance. You need at least 20% equity left after the line, or more than 35% for a standalone HELOC.
- Check your credit. Lenders reserve their lowest margins for strong files. Our guide to a good credit score in Canada explains the ranges.
- Compare margins and fees. Ask at least three lenders for their margin over prime and their full fee list.
- Plan for an appraisal and legal work. The lender orders an appraisal, and a lawyer or notary registers the charge on your title.
- Set a repayment plan. Decide how much principal you will repay each month, even if the minimum is interest only.
Conclusion
A HELOC gives you access to your home equity at prime plus a margin, which ranged from 0.50 to 1.50 points above prime at the lenders that published one on October 18, 2026. The rules cap the revolving portion at 65% of your home's value and total home borrowing at 80%. Use it for planned expenses with a clear repayment schedule, compare margins and fees across lenders, and budget for a higher prime rate. If you are renewing your mortgage at the same time, our guide to negotiating your mortgage renewal can help you bundle the two.
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Frequently asked questions about HELOCs in Canada
What is the current HELOC rate in Canada?
There is no single HELOC rate, because each lender adds its own margin to its prime rate. As of October 18, 2026, the major banks' prime rate is 4.45%. RBC, National Bank and Tangerine publish rates between 0.50 and 1.50 points above prime, while TD, Scotiabank and BMO set the margin case by case. Your margin depends on your credit and equity, so compare offers using our mortgages hub.
How much can I borrow with a HELOC?
Under OSFI Guideline B-20, the revolving portion is capped at 65% of your home's value. Combined with a mortgage, total borrowing can reach 80%, with the extra portion repaid on an amortizing schedule. The lender may approve less based on your income and debts. The affordability calculator helps you test what payments fit your budget.
Is a HELOC rate fixed or variable?
Most HELOC rates are variable and move with your lender's prime rate. When the Bank of Canada cuts or raises its policy rate, your HELOC rate usually changes within days. Some combined plans let you lock part of the balance into a fixed-rate term, which then amortizes like a mortgage. Our article on converting a variable mortgage to fixed covers how locking in works.
Do I have to pay back the principal on a HELOC?
Many lenders require only the interest each month, so the principal can stay outstanding for years. That keeps payments low but means the debt does not shrink on its own. Setting a monthly principal target is the simplest fix. The debt payoff calculator shows how fast a fixed extra payment clears the balance.
What is the difference between a HELOC and a reverse mortgage?
A HELOC requires regular payments, at least the interest, and you must qualify on your income. A reverse mortgage, available to homeowners aged 55 and over, requires no regular payments; the balance grows and is repaid when you sell or move. Each suits a different situation. Our reverse mortgage guide explains the trade-offs.
Can a HELOC hurt my credit score?
A HELOC is reported to the credit bureaus like other revolving credit. Opening one adds a hard inquiry, and carrying a high balance relative to your limit can lower your score. Paying on time every month helps your history. Our guide on how to increase your credit score lists the factors that matter most.
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