HOME EQUITY LINE OF CREDIT (HELOC)
- johnathanmcquoid
- Jan 17
- 2 min read
A Home Equity Line of Credit allows you to borrow against your home’s equity at flexible, lower interest rates — while keeping control over how your debt is structured.
See how this powerful tool works and why homeowners use it 👇
1️⃣ What makes a HELOC unique?
A HELOC lets you divide your total mortgage borrowing into multiple components under one single charge on title.
✔️ mix fixed + variable + revolving credit
✔️ diversify interest-rate exposure
✔️ access funds as needed
You choose how each segment is structured based on your financial goals.
How segmenting debt works
Example:
Home value: $600,000
Mortgage balance: $480,000
You could split it like this:
✔️ $200,000 — variable-rate mortgage
✔️ $200,000 — fixed-rate mortgage
✔️ $80,000 — revolving HELOC credit
This spreads your risk between products that follow different market forces.
2️⃣ What controls HELOC interest rates?
Variable-rate mortgages & HELOCs
✔️ follow the Bank of Canada’s prime rate
Fixed-rate mortgages
✔️ tied to government bond yields
✔️ influenced by major Canadian lenders
This separation lets you protect yourself from sudden rate changes.
3️⃣ Secured vs. unsecured lines of credit
Secured HELOC
✔️ registered against real estate
✔️ lower rates (often prime + 0.50%)
✔️ higher limits (up to 80% LTV)
✔️ easier qualification
Example:
Home value = $500,000
No mortgage balance
80% loan-to-value = $400,000 available as a HELOC
Unsecured line of credit
✔️ higher interest (5–7%+)
✔️ lower limits ($5,000–$40,000)
✔️ based solely on creditworthiness
4️⃣ HELOC eligibility requirements
A HELOC is not available to every homeowner. You must have:
✔️ sufficient equity
✔️ strong credit profile
✔️ stable income
✔️ acceptable debt ratios
Lenders must be confident that the home value supports the borrowing limit.
💬 Final Thought
A HELOC is one of the most flexible borrowing tools available — allowing homeowners to borrow efficiently and manage debt. Message The Frontline Mortgage Group for more info.