How a Home Equity Line of Credit (HELOC) Can Work for You

A home equity line of credit (HELOC) lets you borrow against your home’s equity when you need it, pay it back and borrow again. It works a lot like a credit card, but with a much lower rate because your home secures it.

What is a HELOC?

Equity is the difference between what your home is worth and what you owe on it. A HELOC gives you a credit limit based on that equity. You only pay interest on what you use.

How much can I borrow?

The HELOC itself can be up to 65% of your home’s value. Your HELOC and mortgage together can reach up to 80% of the value.

Many lenders can set one up when you get your mortgage. It stays open until you sell. If you move, you usually need to qualify again on the new home.

How do I qualify?

Lenders look at your equity, credit score, income and other debts. You will usually need an appraisal and the same income documents as a mortgage.

What can I use it for?

• Renovations that may raise your home’s value
• Education for you or your kids
• Paying off high-interest debt at a lower rate
• An emergency fund you can reach quickly

What are the risks?

• Variable rate. Most HELOC rates move with prime, so your interest cost can go up.
• Easy to overspend. Money that is always there can be hard to leave alone.
• Your home is the security. If you cannot pay, your home is at risk.
• Interest-only payments. Many HELOCs only need interest each month, so the balance may not go down unless you pay extra.

How do I use a HELOC well?

• Use it for things that add value, such as a renovation or paying off costly debt.
• Set a plan to pay back the principal, not just the interest.
• Keep a budget and check your balance each month.
• Fit it into your long-term plan, not just today’s needs.

Learn more on our HELOC page, or talk to your mortgage broker in St. Catharines.

Talk to us

Want to know how much you could access? Book a call or phone 289-723-2126.

Common questions