Home Equity Line of Credit (HELOC)

What is a HELOC?

A HELOC is a revolving credit line that lets you borrow against your home's equity, usually at a lower interest rate than traditional lines of credit or credit cards. Interest is variable and paid monthly on the borrowed amount, with flexible repayment options in addition to your mortgage payments.

Potential uses for a HELOC:

• Home renovations, energy-efficient upgrades, furniture, or appliances
• Investment opportunities
• Post-secondary or higher education
• Debt consolidation
• Unexpected expenses

First-time homebuyers may not qualify for a HELOC immediately, depending on their down payment size. Consult with an expert broker for more information.

How much equity can you access with a HELOC?

You might be eligible to borrow up to:

• 80% of your home's market value or purchase price when combined with an existing mortgage
• 65% of your home's market value or purchase price as a standalone HELOC

Refinancing or re-qualification may be necessary. Remember, the borrowed amount must be repaid, either through regular payments, lump sums, or upon selling your home.

How does a HELOC function?

Once established, you can access your credit line as needed:

• Depending on the lender, withdrawal requests may be processed within 1-2 days
• Some HELOCs are linked to a chequing account, allowing access via debit card, e-transfer, or cash withdrawals
• Typically, only monthly interest payments are required on the borrowed amount
• Repayment options are flexible, with no penalties
• The credit line remains available as long as you need it or until you sell your home

HELOCs have variable interest rates, so your payments will fluctuate with prime rate changes. Rates can vary by lender and the level of access convenience.

Repaying a HELOC:

After withdrawing funds, you'll start making monthly interest payments on the outstanding balance. You have the flexibility to repay the principal through:

• Regular payments
• Lump sum payments
• Full repayment at any time without penalties

If a balance remains when you sell your home, it will be settled from the sale proceeds.

HELOC vs. refinancing:

Refinancing allows you to access your home's equity by receiving a lump sum upfront, which becomes part of your new mortgage. In contrast, a HELOC provides a revolving credit line that you can draw from as needed and repay at your convenience.

Mortgage rates for refinancing may be lower than HELOC rates. Our expert brokers can help determine which option best suits your situation.

Secure a HELOC at a competitive rate.

A lower HELOC rate can lead to significant savings during your repayment period.

Our friendly, knowledgeable Axe Mortgage brokers will explain your options and consult with accredited lenders to find the best rate and product for you.

We handle all the paperwork, making the process straightforward and stress-free. Our assistance comes at no cost or obligation to you.

Have more questions? We're here to assist you, wherever you are in Canada. Visit us, call, or connect online.