Let’s not pretend the past few years have been easy. The cost of everything has gone up. Groceries, rent, childcare, interest rates. And while income might have stayed the same, the pressure hasn’t. Most people are looking for smarter, safer ways to stay afloat — or get ahead — without burning through savings or relying on credit cards that barely budge the balance.
There’s one solution more homeowners are quietly turning to: a HELOC.
What a HELOC Actually Is (No Fluff)
A HELOC, or Home Equity Line of Credit, is a way to borrow money using the value you’ve built up in your home. You don’t need to sell your house or refinance your mortgage to access it. A HELOC gives you a credit limit based on your equity, which is the difference between your home’s current value and what you still owe on your mortgage.
According to the Government of Canada, homeowners can typically borrow up to 65% of their home’s appraised value through a HELOC. When combined with your mortgage, your total home-secured debt cannot exceed 80% of your home’s value.
Let’s say your home is worth $600,000 and your mortgage balance is $300,000. Your maximum home-secured borrowing capacity would be 80% of $600,000, which is $480,000. Subtract your $300,000 mortgage, and you may be eligible for a HELOC of up to $180,000 — depending on your credit, income, and lender criteria.
Why HELOCs Are Trending for the Right Reasons
People aren’t just using HELOCs to install backyard pools or upgrade countertops. They’re using them to take control of their financial picture. And in a world where emergencies, tuition, caregiving, and even job loss can happen fast, a HELOC creates room to breathe.
Some of the most common reasons Canadians are turning to HELOCs include:
- Consolidating high-interest credit card debt
- Covering medical or dental expenses not covered by insurance
- Funding home repairs that cannot wait
- Supporting adult children with rising tuition or first-home costs
- Launching or investing in small businesses
It’s not about splurging. It’s about access. Having credit that’s already available when the unexpected happens removes panic from the equation.
Let’s Talk About Interest Rates
This is where the comparison to credit cards or personal loans matters. Most credit cards hover around 20% interest or more. Personal loans sit somewhere between 10% and 16% depending on creditworthiness and lender.
A HELOC? Often closer to 6% to 8%, sometimes even lower. That difference is huge. It means your payments go toward paying off what you owe, not just feeding interest. And if you’re using the funds to consolidate other debts, the long-term savings can be real.
But It’s Still Debt, Right?
Yes. A HELOC is still borrowing. If you take out $30,000 to renovate a kitchen or pay off other debt, you owe that money. What makes it powerful is the structure. You’re only charged interest on the amount you borrow. You can pay it back early with no penalties. Some lenders offer interest-only payments during the draw period.
This kind of flexibility doesn’t exist with fixed-term loans or credit cards. But you still need a repayment plan. A HELOC without a plan becomes just another stressor.
You Might Already Qualify and Not Know It
To get a HELOC, you typically need:
- A solid credit score (620+ is a common benchmark)
- At least 20% equity in your home
- A reliable source of income
- A debt-to-income ratio lenders are comfortable with
If you’ve owned your home for several years and your mortgage is reasonably low, it’s worth asking a lender what your options are. You might be surprised how much equity is available.
And while there are many lenders out there, if you’re just starting your research, take a look at this home equity line of credit at 360Lending to get a sense of what the process looks like.
What to Keep in Mind with a HELOC
A HELOC can be a flexible part of a thoughtful financial strategy, but like any credit product, it works best when approached with care. The U.S. Consumer Financial Protection Bureau outlines several important considerations in their guidance:
- Variable credit limits: Your lender can reduce or freeze your line if home values fall or your financial situation changes
- Variable interest rates: Payments may increase depending on the market
- Interest-only payments: These can lower monthly costs but won’t reduce your balance
- Up-front fees and closing costs: Appraisals, legal fees, and administrative charges can add up quickly
If you’re looking for a straightforward breakdown of how HELOCs work and what to plan for, this official HELOC guide from the Consumer Financial Protection Bureau covers the basics and helps you borrow with confidence.
Not Just for the Wealthy
There’s a misconception that HELOCs are only useful for the ultra-organized or the wealthy. That’s false. If you own your home and have equity, this is a tool that belongs to you. It’s not about making fancy financial plays. It’s about creating room in your budget, reducing interest obligations, and making better use of what you already have.
And while it’s not a solution for everyone, it’s worth exploring if:
- You’re juggling multiple monthly payments and want one lower one
- You’re self-employed and need a financial cushion
- You want to invest in your home or your future without draining savings
What to Watch For
Not every HELOC is created equal. It’s important to:
- Compare interest rates and terms
- Ask about repayment flexibility
- Understand any associated fees
- Avoid using it for lifestyle spending you can’t pay back
And just because you’re approved for a high limit doesn’t mean you should use it all. Borrow what you need. Set boundaries. Treat it like a safety net, not a free pass.
Final Take: What Makes a HELOC the Right Move This Year?
There’s a reason so many Canadians are looking at HELOCs again. The economy is tight. Interest rates are unpredictable. Families are stretched. And the idea of locking in more debt feels terrifying — unless that debt gives you options instead of taking them away.
Used strategically, a HELOC lets you manage life on your terms. It gives you access to capital without the stress of high-interest borrowing. It lets you take care of things without jeopardizing your credit. And it turns your home into more than a monthly payment. It becomes part of your financial plan.
