How to Get a Home Equity Loan or HELOC in Canada
In Canada, the standard home equity product is the HELOC. It is a revolving line of credit, secured by your home. You can repay it and draw from it again, like a credit card. Federal rules cap the HELOC itself at 65% of your home's value. Total mortgage-plus-HELOC borrowing is capped at 80%.
At a glance
- Cost:
- HELOC rates are typically prime + 0.5–2%; setup and appraisal fees apply
- Total time:
- 2–4 weeks from application to funds
- Steps:
- 6 steps
- Where to apply:
- canada.ca, ircc.canada.ca, cra-arc.gc.ca, or your provincial agency
Last reviewed October 2026 against official sources. Re-checked annually · next review due October 2027.
The Steps
Follow these in order
Each card shows the phase, expected time, and any cost. Data checked against official CAN sources(October 2026).
0 of 6 steps
- Before You Go 20 min
Calculate your available equity against the caps
Canadian rules set two limits. The HELOC alone can be no more than 65% of your home's appraised value. Your total mortgage + HELOC borrowing can reach at most 80% of the value. Take a $600,000 home with a $300,000 mortgage. Total borrowing caps at $480,000 (80%). So up to $180,000 of new borrowing is possible. But the HELOC portion cannot go over $390,000 (65%). This example clears that easily. Check both numbers before you shop.
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- Before You Go 30 min
Choose the structure: HELOC, readvanceable, or lump sum
A standalone HELOC is a separate line of credit. Most Canadians combine products. A readvanceable mortgage pairs your regular mortgage with a HELOC. The HELOC limit grows on its own as you pay the mortgage down. For a one-time known cost, some lenders offer a fixed-rate home equity loan. This is a lump sum with fixed payments. It is less common in Canada than in the US. But it is worth asking about, when you want payment certainty.
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- Before You Go 20 min
Check that you pass the stress test
Since 2018, HELOCs and refinance lending are stress-tested. The test rate is the greater of two numbers: your contract rate + 2%, or 5.25% (the OSFI minimum qualifying rate floor). It is the same test as a mortgage. Your credit score counts. Big banks typically want 680+. Your debt-service ratios count. Your provable income counts too. Self-employed borrowers should expect to show 2–3 years of notices of assessment. They may also face stated-income options at credit unions.
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- Go 1–2 days
Compare banks and credit unions
Big banks (RBC, TD, Scotiabank, BMO, CIBC) offer HELOCs at prime + 0.5–1%. Credit unions and trust companies can be more flexible on qualifying. They also lend behind larger mortgages. Compare these points: the rate margin over prime. The setup and appraisal fees. Whether interest-only payments are allowed during the draw period. And the minimum amount you must draw. Your current mortgage holder is often the fastest. They already hold the charge.
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- Fill / Prepare 2–4 weeks
Apply, get appraised, and complete legal work
The lender orders an appraisal. The lender runs the full underwrite: income, credit, and property title. A lawyer, or a notary in Quebec, registers the charge. If you refinance, the lawyer also handles the discharge of any existing registrations. Expect total setup costs of roughly $300–$1,500. This includes the appraisal, the title search, and the legal work.
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- Follow Up
Use the line with discipline
A HELOC is secured by your home. Missed payments can lead to power of sale. This is the Canadian foreclosure process. Interest-only minimum payments are a feature and a trap. The balance never shrinks by itself. Common smart uses: renovations that build value. Consolidating high-rate debt, with a written plan to pay off the balance. Or an emergency reserve you hope never to draw. Avoid using home equity to pay for lifestyle spending.
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FAQ
Frequently Asked Questions
What is the difference between a HELOC and a home equity loan in Canada?
A HELOC is revolving credit. You draw and repay as needed. The rate is variable and tied to prime. You can make interest-only payments. A home equity loan is less common in Canada. It is a fixed lump sum with fixed payments. Canadians often get HELOC-like borrowing through a readvanceable mortgage. It raises your available credit as you pay down the principal.
How much can I borrow against my home in Canada?
The HELOC portion is capped at 65% of your home's appraised value. Total registered debt (mortgage + HELOC) is capped at 80%. So a fully paid-off $500,000 home supports a $325,000 HELOC. A home with a large mortgage has less room. Your income, your credit, and the stress test set the final approved amount. It is below those caps.
Is HELOC interest tax-deductible in Canada?
Only if the borrowed money is used to earn investment or business income. This is the CRACanada Revenue Agency — Canada's tax agency. It administers income tax, benefits like the Canada Groceries and Essentials Benefit (formerly the GST/HST credit), and CRA My Account.Click for official info ↗'s direct-use test. Money used for renovations, a car, or debt consolidation gives you non-deductible interest. Some Canadians use the "Smith Maneuver" to create deductible interest. They reborrow paid-down mortgage equity and invest it. This is an advanced strategy with real risk. Get professional advice before you try it.
What happens if I cannot pay my HELOC?
The lender can call the loan. The lender can begin power of sale. In Ontario and most provinces, this process lets the lender sell the home without going to court. The debt is registered against your title. So even financial trouble that looks unsecured can end with you losing the house. If payments get hard, contact the lender about a payment plan. Do this before you miss payments. Also consider credit counselling. It is non-profit, for example the Credit Counselling Society.
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