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The best current HELOC mortgage rates in Canada
Check out today's best mortgage rates in Canada by type and term.
Rates are based on an average mortgage of $300,000
| Insured ? | 80% LTV ? The rates in this column apply to mortgage amounts between 65.01% and 80% of the property value. The home must be owner-occupied and have an amortization of 25 years or less. You must have purchased it for less than $1 million. These rates are not available on refinances. Refinances require "Uninsured" rates. | 65% LTV ? The rates in this column apply to mortgage amounts that are 65% of the property value or less. The home must be owner-occupied and have an amortization of 25 years or less. You must have purchased it for less than $1 million. These rates are not available on refinances. Refinances require "Uninsured" rates. | Uninsured ? | Bank Rate ? | ||
|---|---|---|---|---|---|---|
Insured 4.99% | 80% LTV 5.6% | 65% LTV 5.6% | Uninsured 6.69% | 6.79% | ||
Insured 5.67% | 80% LTV 5.3% | 65% LTV 5.3% | Uninsured 6.04% | 6.39% | ||
Insured 4.79% | 80% LTV 4.94% | 65% LTV 4.94% | Uninsured 4.94% | 5.55% | ||
Insured 4.94% | 80% LTV 4.94% | 65% LTV 4.94% | Uninsured 5.09% | 5.29% | ||
Insured 4.74% | 80% LTV 4.79% | 65% LTV 4.79% | Uninsured 4.94% | 4.84% | ||
Insured 4.94% | 80% LTV 5.29% | 65% LTV 5.29% | Uninsured 5.09% | 5.9% | ||
Insured 5.74% | 80% LTV 5.89% | 65% LTV 5.89% | Uninsured 5.84% | 7.25% | ||
Insured 6.1% | 80% LTV 6.7% | 65% LTV 6.7% | Uninsured N/A | 8.6% | ||
Insured 5.9% | 80% LTV 6.1% | 65% LTV 6.1% | Uninsured 6.25% | 6.59% | ||
Insured 7.2% | 80% LTV 7.2% | 65% LTV 7.2% | Uninsured 7.2% | N/A | ||
Insured 6.74% | 80% LTV 6.79% | 65% LTV 6.79% | Uninsured 5.25% | N/A |
What is a HELOC?
A home equity line of credit (HELOC) is a secured loan. The total loan amount is determined by how much equity you own in your home, meaning your property is the collateral. It’s like taking out a second mortgage on your home.
Because your home is often your largest asset, many people use that as leverage to borrow money on large purchases or renovations.
Most lenders offer two types of HELOCs:
A HELOC-mortgage combination
Your mortgage amount and your current equity determine the loan amount. As you pay down debt, the amount of money you can borrow increases.
A stand-alone HELOC branded under the financial institution's name
Since it's not tied to your mortgage, you can apply for this HELOC type from any lending institution. Still, you will receive a fixed loan amount that stays the same as you pay down your mortgage. You can get up to 65% of your home's purchase price or market value. This type of HELOC is also referred to as a re-advanceable mortgage.
HELOCs allow borrowers to tap into their equity, giving them access to additional funding for other expenses. Plus, HELOCs often come with flexible monthly payment schedules.
If you need to access cash quickly to consolidate debts, cover home renovations or pay for your children’s education, a HELOC can be a means to do that.
A HELOC also allows you to access this funding as needed, so you’ll only pay interest on the borrowed money.
You can compare the best HELOC rates right here at LowestRates.ca. Get started by selecting a product from our rate chart above.
How does a HELOC work?
HELOCs function like a mortgage. You can start by comparison shopping and finding a lender that offers the best HELOC mortgage rates in your area. You would then submit the appropriate application forms and go through an appraisal, just like when you first applied for a mortgage. Once you're approved, you'll get access to your funds. Many HELOC lenders provide online applications to help speed up the process.
As home equity has climbed and mortgage rates have also increased recently, a HELOC can act as an alternative to cash in on your home's value without refinancing your mortgage.
How do I qualify for a HELOC in Canada?
The good news is that you only need to qualify for a HELOC once. After that, you can access funds whenever you need to.
Your lender will require:
A minimum down payment or equity of 20% or,
A minimum down payment or equity of 35% if you want to use a stand-alone HELOC as a substitute for a mortgage.
Before approving you for a HELOC, your lender will also require that you have:
A credit score of at least 680,
Proof of stable income,
An acceptable level of debt compared to your income.
To qualify for a HELOC at a bank, you must pass a "stress test." You will need to prove you can afford payments at a qualifying interest rate typically higher than the actual rate in your contract.
How do I calculate my HELOC?
To calculate your home equity, you'll need to find the current value of your home. There are a few ways to do the latter: you can quickly search for your address on a real estate website for a rough estimate, use an online valuation calculator, or speak with an appraiser or realtor. Speaking to professionals yields the most accurate results. Your HELOC lender will most likely require you to get an official estimation from an appraiser.
The size of the HELOC loan depends on how much equity you have built up. Your HELOC lender subtracts how much you still owe on your first mortgage from the appraised value of your home. The difference — the “loan-to-value" or LTV, also known as a combined LTV (CLTV) —establishes how much you can get with a HELOC.
Frequently asked questions about HELOC mortgages
Should I use a mortgage broker to get a HELOC?
The answer is that it depends. A HELOC is a secured loan on a property you already own. You may have established a relationship with your lender and can readily access a HELOC at the cheapest possible rate.
However, you can also speak to a broker about HELOCs. Because mortgage brokers have relationships with many lending institutions, they can often secure a better HELOC rate than you can by yourself. Working with a broker has the convenience factor, as they shop around for you.
It depends on your needs, how quickly you need to access the money and how good your relationship is with your lender. There is no correct answer. Do what works for you.
How do HELOC rates compare to mortgage rates?
HELOC rates vary depending on how your lender sets them up. They usually have a variable interest rate based on your lender's prime lending rate. Each financial institution sets the prime lending rate individually as a starting rate for their variable loans, such as mortgages and lines of credit.
A HELOC will often have an interest rate slightly higher than your mortgage rate. HELOC rates are usually set at the prime rate plus an additional percentage point. Your HELOC rate will differ depending on the lender you use.
For most of 2019 and throughout the first part of 2020, variable and fixed rates reached historic lows in Canada. Since March 2022, rates have risen as a direct response to high inflation. It's important to remember that you're charged interest only on what you borrow from your credit line. If your HELOC has a $0 balance, rising rates won't impact you. But if your credit line currently carries a large balance, you could see your monthly payments increase substantially. While HELOC rates will likely be higher than your mortgage rate, they'll probably be lower than your traditional line of credit.
Remember that your lender technically has the right to change your HELOC rate anytime.
Why should I get a HELOC?
There are several advantages to applying for a HELOC, including easy access to credit and lower interest rates than other types of credit. Here are some of the other benefits of a HELOC in Canada:
Easy access to credit: One of the primary features of a HELOC is that you can access funds whenever you need them.
Lower interest rates: A HELOC will often come with lower interest than other types of credit, particularly unsecured loans and credit cards.
Interest: You only pay interest on the amount you borrow.
No prepayment penalties: You can pay back the money you borrow at any time without incurring a prepayment penalty.
Debt consolidation: You can also use a HELOC to consolidate your debt, sometimes at a lower interest rate.
Other forms of credit: When combined with a mortgage, a HELOC can include other forms of credit under a single credit limit. These products include personal loans, credit cards, car loans and business loans.
What are the disadvantages of getting a HELOC?
While there are many benefits to taking out a HELOC, there is no such thing as a perfect financial product. Therefore, it's also important to also highlight the drawbacks.
Easy to lapse on payments: One of a HELOC's greatest advantages can also be its greatest drawback. Because you're only required to pay monthly interest, they can require discipline to pay off.
Debt buildup: While having revolving credit can be a huge convenience, it can also make it easier to spend more. Many people who take out HELOCs wind up carrying debts for long periods.
Makes it harder to move your mortgage: To switch your mortgage to another lender, you may have to pay off your full HELOC and any credit products you have associated with it.
Other things: Variable interest rates can change, your lender can reduce your credit limit at any time, your lender has the right to demand you pay the total amount at any time, and your credit score may decrease if you don't make the minimum payments.
What are the fees associated with a HELOC?
Just like with any financial product, it’s critical to understand the extra fees you might have to pay. Fees that you might pay on a HELOC include:
Home appraisal or valuation fees: Your lender charges this fee to send someone to your home to assess its value.
Legal fees: You’ll want to contact a lawyer or title service company to register the collateral service charge on your home.
Title search fees: Another legal expense you could incur is a title search, which ensures there are no liens in your home.
Administration fees: Often charged by your lender for the management of your account.
Credit insurance fees: You may pay additional premiums for different types of insurance on your HELOC, including life, critical illness, disability and job loss insurance.
Discharge or cancellation: Your lender will charge this fee if you cancel your HELOC and remove the collateral charge from the title of your home.
How can I get a cheaper HELOC rate?
There are several things your lender will consider when determining your HELOC rate. Some of these are within your control, while others are harder to influence. Here are some examples:
Your credit score: The best way to improve your credit score is to make payments regularly and on time to build up a history of being a reliable borrower.
Your income stability: This is one of those factors that's harder to control. Your income stability will largely depend on your profession and seniority level.
Your net worth: Your net worth can be calculated as the total value of your assets minus your debt. One quick way to increase your net worth is to pay off all your debt, though we recognize this is challenging.
Your home’s price: The price of your home will inevitably contribute to the HELOC rate your lender is willing to offer you.
The state of the market: Different lenders may offer you a different rate depending on their internal data. The best way to secure a great rate on loan products — including a HELOC — is to shop the market to see what's out there.
How can I get a HELOC mortgage on LowestRates.ca?
On LowestRates.ca, we can connect you with lenders who offer HELOC products in just a few minutes. If the bank you currently hold your mortgage with isn’t on the list, don’t despair. You can often carry a HELOC with one lender and your mortgage with another. All you have to do is fill out the form above to be matched with a lender in your area.
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*Based on the difference between estimated deep-discount 5-year fixed rates from Canada's top six banks and the lowest comparable rates on LowestRates.ca, as of January 14, 2022.