HELOCs in Canada: How Much You Can Borrow and When It's a Terrible Idea
By Jordan Ellis · Published · Reviewed
Quick Answer
You can typically borrow up to 65% of your home's value as a HELOC, with total lending (mortgage + HELOC) capped at 80%. On a $700,000 home with a $400,000 mortgage, that's up to $160,000 of HELOC room. Rates typically run prime + 0.5% to prime + 1% (about 4.95–5.45% with prime at 4.45% in September 2026), with interest-only payments — cheap, flexible, and dangerous precisely because it's both.
A HELOC is your home’s equity turned into a credit card with a mortgage-sized limit and a credit-card-sized discipline requirement. Used well it’s the cheapest borrowing most Canadians ever get; used casually it’s how the house pays for the boat and then the boat takes the house.
How much room you actually have
Maximum total lending: 80% of appraised value (mortgage + HELOC combined), with the revolving HELOC portion capped at 65% of value.
On a $700,000 home with a $400,000 mortgage: 80% = $560,000 total lending, minus $400,000 mortgage = $160,000 of room. The standalone 65% HELOC cap ($455,000) doesn’t bind here — the 80% ceiling does. One wrinkle: with readvanceable products, some lenders make only the slice up to 65% revolving and structure the rest as an amortizing segment. Run your own numbers with the HELOC calculator; the loan calculator prices any payment you’re considering.
What it costs
HELOCs float at prime + 0.5% to +1.0% (about 4.95–5.45% with prime at 4.45% in September 2026), with interest-only minimum payments. That’s the feature and the trap: a $50,000 balance costs roughly $205–$230/month forever while never shrinking. Prime moves with the Bank of Canada — every BoC hike raises your payment within a month or two.
HELOC vs the alternatives
| Need | Best tool |
|---|---|
| Ongoing access, renos over time | HELOC |
| One big amount, fixed rate | Refinance (watch IRD penalties — refinance calculator) |
| Bad credit, can’t refinance | Second mortgage (expensive — 8–12%+) |
| Investing (Smith Manoeuvre) | Readvanceable mortgage, professional advice mandatory |
The consolidation trap
The single most dangerous HELOC move: paying off $30,000 of credit cards at 22% with home equity at 6%. The math is flawless and the outcome is usually not — because the cards stay open, the spending pattern stays intact, and 18 months later there’s $30,000 on the cards and $30,000 against the house. You’ve converted debt that could only hurt your credit into debt that can take your home. If you consolidate this way: cards closed or frozen, written payoff plan, automated principal-plus-interest payments. Our debt consolidation guide covers the safer unsecured route.
Bottom line
A HELOC is a power tool: unmatched for renovations, emergencies-of-record, and disciplined investing — catastrophic as a lifestyle subsidy. Borrow against the house for things that build value, never for things that depreciate, and always on a principal-plus-interest schedule you set yourself.
Official sources
Rules and dollar limits change. Confirm current amounts with the official pages below before you act · Last reviewed .
- Mortgage prepayment penalties (Financial Consumer Agency of Canada)
- Policy interest rate (Bank of Canada)