Home Equity Line of Credit

There are many benefits to accessing your home equity such as paying off debts, making a major purchase or even just giving yourself a little bit of financial security.

Home equity is the amount of money that your home has accumulated as a result of paying off some of your mortgage or an increase in value. The equity you have in your home is the amount of your home's appraised value, minus your mortgage loan amount. For example, if your home is appraised at $200,000, but you have a $100,000 mortgage loan, your home equity is approximately $100,000. A home equity line of credit (also known as a HELOC) works much like a regular line of credit. You can withdraw money from the line of credit whenever you want, up to the approved credit limit. You can pay it back and borrow again.

How much can you borrow?

Your estimated available borrowing power on a home equity line of credit will vary based on credit score, income, property condition, and other existing financial obligations.

Additionally, recent changes to regulations in the mortgage industry in Canada mean that the maximums are now a bit lower than they used to be. The Office of the Superintendent of Financial Institutions (OSFI) has issued guidelines for federally regulated lenders that address the maximum amount. OSFI expects federally regulated lenders to limit new home equity lines of credit to 65% of a home’s appraised value. A home equity line of credit can be combined with a regular mortgage for a maximum of 80% of a home’s appraised value. This means that you can borrow, with your mortgage and a home equity line of credit, up to 80% of the value of your home.

What can a home equity line of credit be used for?

Once approved, you can use the funds for whatever you want. Some popular uses for a home equity loan are:

  • Home improvements, repairs, and renovations
  • Purchasing of a new vehicle
  • Vacation
  • Debt consolidation
  • College or university tuition

Home equity rates and terms vary depending on various factors, so we recommend that you contact your mortgage provider to find out more about the options available to you and to get the process started.