Key takeaways
- →A HELOC is a revolving line of credit secured against home equity, often combined with an existing mortgage; a refinance replaces the existing mortgage entirely with a new, larger amortizing loan.
- →OSFI caps the revolving portion of a home equity line at 65% loan-to-value, and requires anything above that level to be amortizing and non-readvanceable — a refinance can go up to 80% LTV, since refinances are always uninsured.
- →A HELOC can typically sit alongside an existing fixed-rate mortgage without breaking its term or triggering a prepayment penalty; a full refinance replaces the term outright.
- →Neither option is automatically cheaper or simpler — the right choice depends on whether the client wants to keep an existing rate undisturbed or consolidate everything into one new payment.
A client asking how to access their home equity is usually picturing one option, when there are really two structurally different paths — and the maximum amount available, the qualifying process, and the effect on their existing mortgage differ meaningfully between them.
Here's what actually separates a HELOC from a refinance, how much equity each one can actually reach under current OSFI rules, and how to help a client choose between them.
01 · What's structurally different between a HELOC and a refinance?
A home equity line of credit (HELOC) is a revolving credit facility secured against the home, often set up as part of a combined loan plan (CLP) alongside an existing amortizing mortgage. The client draws against it as needed and pays interest only on what's outstanding.
A refinance replaces the existing mortgage with a new, larger amortizing loan, rolling the extra equity access into one new payment on one new term — there's no separate revolving facility involved.
02 · How much equity can actually be accessed through each option?
OSFI's Guideline B-20 caps the revolving, readvanceable portion of a combined loan plan at 65% loan-to-value; any lending above that threshold must be amortizing and non-readvanceable, and principal payments applied above the 65% line must be matched by a reduction in the overall authorized limit until the combined plan falls back to 65%.
| Option | Maximum LTV | Why |
|---|---|---|
| HELOC (revolving portion) | 65% | OSFI B-20 caps readvanceable credit at 65% LTV |
| Refinance | 80% | A refinance is always an uninsured mortgage, capped at the standard 80% conventional LTV line |
03 · Do a HELOC and a refinance get qualified the same way?
Both are generally assessed under the same debt-service principles federally regulated lenders apply to any new borrowing. The practical difference is what happens to the existing mortgage: a HELOC can typically be added alongside a fixed-rate mortgage without disturbing its term, rate, or prepayment penalty, while a refinance necessarily resets the mortgage's rate, term, and remaining amortization.
That distinction matters most for a client sitting on a below-market rate they don't want to lose — refinancing to access equity means giving that rate up, while a HELOC leaves it untouched.
04 · When does each option actually fit a client's situation?
A HELOC tends to fit a client who wants flexible, draw-as-needed access — renovation costs paid out over time, an investment opportunity, or a cash cushion — and who has an existing mortgage rate worth protecting.
A refinance tends to fit a client consolidating higher-rate debt into one lower, amortizing payment, or one who simply wants a single predictable number rather than a revolving balance to manage.
05 · What should a broker flag before recommending either option?
Walk the client through the readvanceable mechanics of a combined loan plan specifically — how the 65% ceiling works, and how it can limit future borrowing room as the property's value or the outstanding balance changes. For clients weighing the trade-off against simply switching lenders altogether, see our companion piece on porting vs. breaking a mortgage.
Either path adds documentation and condition work to a file — the kind of packaging Treadstone's fulfillment support for mortgage professionals is built to absorb so it doesn't slow down the rest of a broker's pipeline.
Equity files, packaged without the bottleneck
Run the HELOC or refinance file without slowing the rest of the pipeline.
Treadstone's fulfillment associates handle the documentation and condition-clearing on equity-access files, freeing brokers to focus on the client conversation.
Frequently asked questions
This article is general information to help you scale — not a substitute for tailored advice on your specific business, licensing, or compliance obligations. All figures are illustrative examples for planning purposes; actual costs vary by province, market, and brokerage.