HELOC Calculator Canada 2026

Calculate interest costs and monthly payments on a home equity line of credit. Estimate how much you can borrow against your Canadian home equity.

FAQ

What is the difference between a HELOC and a home equity loan?

A HELOC is a revolving line of credit — you draw and repay funds as needed, paying interest only on the amount currently borrowed. A home equity loan (sometimes called a second mortgage) provides a lump sum upfront with fixed payments over a set term, similar to a regular mortgage. HELOCs offer more flexibility but have variable rates, while home equity loans offer payment predictability with a fixed rate. Choose based on whether you need ongoing access to funds or a one-time lump sum.

How is HELOC interest calculated in Canada?

HELOC interest is calculated daily on your outstanding balance and charged monthly. The rate is variable, typically expressed as prime plus a margin (for example, prime + 0.5%). When the Bank of Canada raises or lowers its policy rate, your HELOC rate changes accordingly — if prime is 5.95% and your margin is 0.5%, your HELOC rate is 6.45%. Daily interest is calculated as (balance x annual rate) / 365.

What is a readvanceable mortgage?

A readvanceable mortgage is a combined product that includes a fixed mortgage portion and a HELOC under one umbrella. As you make mortgage payments that reduce your principal, the HELOC credit limit automatically increases by the same amount, keeping the total facility at the original approved amount. This structure is particularly useful for strategies like the Smith Manoeuvre, where you reborrow the paid-down principal to invest and make the interest tax-deductible.

Can HELOC interest be tax-deductible?

Yes, but only if the HELOC funds are used for eligible investment purposes — specifically, to earn income from a business or investments. If you borrow from your HELOC to invest in stocks, bonds, or rental property, the interest may be deductible against your investment income. The CRA requires you to maintain a clear paper trail showing the borrowed funds were used for income-producing purposes. Interest on HELOC funds used for personal expenses (renovations, vacations, etc.) is not deductible.

What are the risks of a HELOC?

Variable rates can increase your costs significantly if rates rise, interest-only minimum payments make it easy to carry a large balance indefinitely without building equity, your home serves as collateral (so default could result in foreclosure), and lenders can technically reduce or freeze your credit limit. Additionally, using a HELOC for consumption spending rather than investments or value-adding renovations reduces your home equity without building assets. Treat HELOC borrowing as strategically as you would a mortgage.

How does this calculator work?

Enter your home's current appraised value, your outstanding mortgage balance, and the HELOC interest rate (typically prime rate plus a margin). The calculator determines your maximum available HELOC limit based on the 65% LTV ceiling and the 80% combined mortgage-plus-HELOC ceiling, then computes the interest cost on any drawn amount. It shows your monthly interest-only payment for different draw amounts, illustrates how costs change as prime rate fluctuates, and lets you model how principal payments beyond the minimum accelerate your paydown.