Home Equity Line of Credit (HELOC)
for GTA renovations.
A HELOC is the lowest-cost way to finance a renovation in Ontario, period. If you have 20% or more equity in your home and a credit score above 660, almost no other option beats it — not credit cards, not personal loans, not even most contractor-direct financing offers.
- Typical rate
- Prime + 0.5% to 1.5%
- Setup time
- 2-4 weeks to set up
- Min. credit score
- 660+
- Best for
- Mid-to-large renos ($25K+) with home equity
How a HELOC actually works
A Home Equity Line of Credit is a revolving credit account secured against your home. Your bank approves you for a maximum credit limit — typically up to 65% of your home's value (or 80% if combined with a mortgage in a single product like Scotia STEP or RBC Homeline). You draw from it like a chequing account: pay the contractor, write a cheque, the balance goes up. Pay down what you've used and that credit is available again.
The big advantages are the rate and the structure. HELOCs are tied to Prime — currently around 7.20% in Ontario — plus a margin of 0.5-1.5%. Compare that to a personal loan at 9-14% or a credit card at 19.99%, and the math is obvious. You can also pay interest-only during the renovation, which keeps cash flow workable while construction is in progress, then start paying down principal once the project closes.
What it costs to set up
The bank will order an appraisal ($300-$500), pull credit, and verify income. If you already have a mortgage with the same lender, they may waive the appraisal. Title insurance and legal fees run $700-$1,200 if it's not bundled into your existing mortgage product.
Most HELOCs take 2-4 weeks from application to funding — faster than a refinance, slower than a credit card.
Where it falls short
You need real equity. If you bought in 2024-2025 and haven't built much equity, you may not qualify for enough HELOC to cover a meaningful reno. The rate is also variable — when Prime moves, your rate moves. Most homeowners in the GTA can carry that risk easily; a few cannot.
When to use it instead of something else
Use a HELOC over a refinance when you don't want to renegotiate your existing mortgage rate (especially if you locked in below 5% in 2020-2021). Use it over a secured renovation loan when you have the equity — the rate gap is usually 2-4 percentage points, which on a $50K reno over 5 years is roughly $5,000-$10,000 in interest saved. Use it over contractor financing when the project is large enough that the 0% promotional periods on builder loans won't cover the whole balance.
We see HELOCs used most often for kitchen renovations and bathroom renovations — projects where the homeowner has built up real equity over 5-10 years in the home.
Worked example
What it actually costs.
Mid-range kitchen reno on a Toronto detached home with $400K of equity.
- Amount borrowed
- $45,000
- Rate
- Prime + 1.0% (currently 8.20%)
- Term
- Interest-only for 12 months, then 5-year payback
- Monthly payment
- $307 during reno (interest only), then $920/mo for 5 years
- Total interest cost
- Roughly $10,200 in interest over the full payback period
How to qualify.
- Home equity of 20% or more (calculated as: current value × 0.80 − existing mortgage balance)
- Credit score 660+ (most lenders prefer 680+)
- Verifiable income — 2 years of T4s or NOA for self-employed
- Total debt service ratio under 44% (your total monthly debt obligations including the new HELOC, divided by gross monthly income)
- Property must be owner-occupied — investment property HELOCs exist but cost more
Why it works
- Lowest interest rate of any reno-financing path
- Revolving credit — pay it down, draw it back as you spend
- Interest-only payments allowed during construction
- No prepayment penalty
- Can be reused for future projects without re-applying
Where it falls short
- Requires real home equity (~20%+)
- Bank appraisal needed unless bundled with existing mortgage
- Floating rate moves with Prime
- 2-4 week setup means it's not a fast option
- Defaults are secured against your home
See your project's price range — before you call.
Three questions, real numbers from 200+ Toronto-area projects. We'll email the range and a brief on what drives it up or down.
Step 1 of 3
What kind of project?
Frequently asked
About heloc financing.
- Can I get a HELOC if I already have a mortgage?
- Yes. You can either take a standalone HELOC at the same bank or a different one, or you can refinance into a combined mortgage + HELOC product (RBC Homeline, Scotia STEP, TD Home Equity FlexLine). The combined products often have lower setup costs.
- How much can I borrow on a HELOC?
- Up to 65% of your home's appraised value as a standalone HELOC, or up to 80% when combined with a mortgage. Example: $1M home with $400K mortgage = up to $650K - $400K = $250K standalone HELOC, or $800K - $400K = $400K combined.
- Do HELOC rates move when Prime moves?
- Yes — HELOCs are variable-rate by default. When the Bank of Canada changes the overnight rate and banks adjust Prime, your HELOC rate moves the same day. Some banks offer a 'rate lock' feature where you can convert a portion of the balance to a fixed-rate term loan.
- Will applying for a HELOC affect my credit score?
- There's a hard credit pull during application (5-10 point temporary dip). Once the HELOC is open and unused, it slightly improves your score because of the higher total available credit. Drawing on it heavily can hurt utilization metrics.
Pairs well with
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