Hustle & GritWatch us on YouTube
A Home Equity Line of Credit (HELOC) is a revolving line of credit secured against home equity, usually registered as a collateral charge, that lets a borrower draw funds, repay them, and draw again up to an approved limit without applying for a new loan each time.
A traditional mortgage is amortizing — each payment is a mix of principal and interest that brings the balance to zero by the end of the amortization period. A HELOC is revolving, more like a credit card secured by the home: the borrower can draw funds up to the approved limit, pay them back, and draw again, often paying interest only on the amount actually outstanding.
Because a HELOC is secured, it is typically registered on title as a collateral charge, frequently bundled with an amortizing mortgage segment as a readvanceable mortgage. Borrowers commonly use a HELOC for renovations, debt consolidation, or as a flexible source of funds rather than as the primary financing for a purchase.
Registered as a collateral charge: most Canadian lenders secure a HELOC with a collateral charge rather than a standard charge, which affects how easily the mortgage can later be switched to another lender.
Often paired with a mortgage: a HELOC is frequently offered alongside an amortizing mortgage as a single readvanceable product from A lenders and credit unions.
Lender-set limits and terms: credit limits, qualifying requirements, and combined loan-to-value rules are set by each lender within the principles-based expectations of OSFI Guideline B-20.
Revolving, not fixed: unlike a lump-sum second mortgage, a HELOC balance can be paid down and redrawn repeatedly without renegotiating the loan.
Definitions reflect Canadian federal and provincial rules as of the “Updated” date above. Not advice for any specific file.
Every term a Canadian mortgage professional needs — defined, sourced, and kept current.
See how Treadstone can scale your brokerage — a free call, no commitment.