Is a HELOC Right for You?

According to a 2019 survey by the Financial Consumer Agency of Canada, many people appear to lack awareness of the terms and conditions of a Home Equity Line of Credit, HELOC for short. This can expose consumers to a high risk of over-borrowing, carrying debt for extended periods and uninformed decision-making.

HELOCs are a secured form of revolving credit. The issuing lender uses your home as security that you’ll pay back the money you borrow. As you pay your HELOC down, you can re-borrow again, up to a maximum credit limit you were approved for. Up to 65% of the value of your home.

When used responsibly, HELOCs can benefit consumers through low interest rates, convenient access to funds and flexible repayment terms including interest only. Unfortunately, the convenient features of a HELOC may encourage consumers to add too much to their debt load. In fact, 27 percent of those who responded to FCAC’s survey said they make mainly interest-only payments on their HELOCs. Considering, on average, Canadians owe about $65,000 on their HELOCs, means many homeowners end up carrying debt for long periods.

If you have a home equity line of credit or are considering getting one, ask yourself:

  • Would a HELOC tempt you to use your home like an ATM?
  • Could you still afford HELOC payments if you lose your job or interest rates go up?
  • Are you prepared to stick to a plan to pay it back, and avoid continually borrowing for minor expenses against your home equity?

These are just some of the questions to consider before borrowing money that will be secured by your home equity.

If you’re considering a home equity line of credit, talk to a Mortgage Broker about how this product may fit into your financial and investment future.

Steven Porter is a Licensed mortgage agent with Mortgage Architects, mortgage broker. For advice and service contact Steven Porter, Accredited Buyer Representative, Seniors Real Estate Specialist, Certified Luxury Home Mortgage Advisor and Certified Reverse Mortgage Specialist at 905-875-2582,

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