A readvanceable mortgage combines a standard mortgage with a HELOC under a single registration, and the HELOC limit increases as you pay down the mortgage principal. Every dollar of principal you repay becomes a dollar of credit you can borrow again, without reapplying or paying new legal fees. All-in-one mortgages go a step further and merge the mortgage with your chequing and savings, so every deposit reduces the balance interest is charged on. Lenders often market both as “flexible mortgages”. This page is part of our guide to mortgage types and features.
Types of Flexible Mortgages
| Product type | How it works | Key feature |
|---|---|---|
| Readvanceable mortgage | Mortgage + HELOC under one registered charge; the HELOC limit grows as principal is repaid | Access equity without refinancing |
| All-in-one account | Mortgage + chequing + savings in a single account, with interest calculated daily on the net balance | Every dollar deposited reduces interest |
| Split mortgage | Several mortgage segments with different rates and terms under one product | Mix fixed and variable rates |
| HELOC-only structure | The whole loan is a revolving line of credit (interest-only option) | No forced principal repayment |
How a Readvanceable Mortgage Works
The Basic Mechanics
| Component | Description |
|---|---|
| Mortgage portion | Standard amortizing mortgage: principal declines with each payment |
| HELOC portion | Revolving credit line: the available limit grows as mortgage principal shrinks |
| Combined limit | Set by the lending limits below, measured against the appraised value |
| Registration | Single collateral charge (usually 100-125% of home value) |
The revolving (non-amortizing) HELOC part can't exceed 65% of the home's value at a federally regulated lender. Under the Bank Act, a bank's loan to buy, renovate or improve a home, or a refinance of such a loan, together with any mortgage ranking equal to or ahead of it, can't exceed 80% of the home's value.
How the Readvancing Works Over Time
| Year | Mortgage Balance | Available HELOC | Total Facility |
|---|---|---|---|
| Year 0 | $400,000 | $0 | $400,000 |
| Year 3 | $374,000 | $26,000 | $400,000 |
| Year 5 | $354,000 | $46,000 | $400,000 |
| Year 10 | $295,000 | $105,000 | $400,000 |
| Year 15 | $220,000 | $180,000 | $400,000 |
| Year 20 | $123,000 | $277,000 | $400,000 |
Based on a $500,000 home, an 80% limit ($400,000 facility), a 5% mortgage rate and a 25-year amortization. HELOC availability assumes no draws.
Every payment shifts capacity from the mortgage column to the HELOC column. The total facility stays fixed unless the property is reappraised at a higher value.
Readvanceable Products in Canada
| Lender | Product name | Sub-accounts | Registration type |
|---|---|---|---|
| Scotiabank | STEP (Scotia Total Equity Plan) | Multiple | Collateral |
| TD Bank | Home Equity FlexLine | Multiple | Collateral |
| National Bank | All-In-One | Yes | Collateral |
| Manulife Bank | Manulife One | Integrated | Collateral |
| RBC | Homeline Plan | Yes | Collateral |
| BMO | ReadiLine | Limited | Collateral |
| CIBC | Home Power Plan | Yes | Collateral |
HELOC rates on these products are usually quoted as prime plus a margin that depends on your credit profile; current pricing is in HELOC rates in Canada.
Scotiabank STEP and TD FlexLine keep the mortgage and HELOC in clearly separated sub-accounts, which makes it easy to track what each borrowed dollar was used for. Manulife One and National Bank All-In-One are integrated all-in-one accounts, described in the next section.
All-in-One Mortgages: Manulife One and National Bank All-In-One
An all-in-one mortgage combines your chequing, savings, mortgage and line of credit into a single balance. Your pay goes straight against the mortgage balance, and interest is calculated daily on whatever is owed that day.
How Daily Interest Calculation Works
| Day | Balance start | Pay in | Spending out | Closing balance | Interest charged on |
|---|---|---|---|---|---|
| 1st (payday) | $400,000 | -$5,000 | $395,000 | $395,000 | |
| 5th | $395,000 | +$200 (groceries) | $395,200 | $395,200 | |
| 10th | $395,200 | +$1,500 (bills) | $396,700 | $396,700 | |
| 15th (payday) | $396,700 | -$5,000 | $391,700 | $391,700 |
Because interest is charged daily on the net balance, every dollar deposited reduces interest for as long as it stays in the account. If a $5,000 paycheque sits for 14 days before bills come out, you save 14 days of interest on that $5,000.
Who Benefits Most From an All-in-One Account
| Profile | Benefit level | Why |
|---|---|---|
| High-income earner | High | Large paycheques reduce the balance significantly between spending |
| Irregular income (self-employed) | High | Large deposits offset periods of lower income automatically |
| Two-income household | High | Two paycheques keep the balance lower more often |
| Living paycheque to paycheque | Low | No surplus cash to reduce interest, so any rate premium just costs more |
| Pays credit cards in full monthly | Moderate | Cash stays in the account longer before the card is paid |
Split Mortgages: Mixing Fixed, Variable and HELOC Segments
Many readvanceable products let you split the borrowing into segments with different rates and terms, which spreads rate risk.
| Segment | Amount | Type | Rate | Term |
|---|---|---|---|---|
| Segment 1 | $250,000 | 5-year fixed | 4.49% | 5 years |
| Segment 2 | $150,000 | Variable | 4.20% | 5 years |
| Segment 3 | $100,000 | HELOC (interest-only) | 6.45% | Revolving |
Illustrative rates only, not current offers.
This structure gives a fixed rate on half the borrowing, variable-rate exposure on another part and a revolving line for the rest. Today’s rates for each piece are on our mortgage rates pages, and the choice between the two rate types is covered in fixed vs variable mortgages.
Readvanceable Mortgages and the Smith Manoeuvre
A readvanceable mortgage is the structure behind the Smith Manoeuvre, where the credit freed up by each payment is borrowed and invested so the interest on that part may become tax-deductible. The steps, the tax rules and the risks are covered in our guide to the Smith Manoeuvre.
Who a Readvanceable Mortgage Suits
Good fits
| Profile | Why a readvanceable works |
|---|---|
| Borrowers planning to invest with home equity | Automatic HELOC access as the mortgage declines |
| Homeowners planning renovations | Borrow as equity builds instead of taking a separate loan |
| Self-employed with irregular income | Flexible draw and repay structure |
| Real estate investors | Access equity for down payments on other properties |
| Disciplined savers who want liquidity | Capital stays accessible as an emergency reserve |
Who it may not suit
| Profile | Why |
|---|---|
| Borrowers who find open credit hard to leave alone | Easy access to credit can grow total debt |
| First-time buyers with little equity | Little or no HELOC room until the balance falls below the combined limit |
| People who switch lenders often | A collateral charge makes switching expensive |
| Those chasing the lowest possible rate | Monoline lenders often price lower but may not offer a readvanceable product |
Cost Comparison: Readvanceable vs Standard Mortgage
| Feature | Readvanceable mortgage | Standard mortgage + separate HELOC |
|---|---|---|
| Setup cost | One registration ($500-1,500) | Two registrations ($1,000-3,000) |
| HELOC activation | Automatic as principal declines | Manual: separate application required |
| Rate on mortgage portion | Big-bank pricing | May be lower with a monoline lender |
| Switching lenders at renewal | Expensive ($1,000-1,900) | Mortgage portion transferable; HELOC is not |
| Flexibility | High | Lower: you must reapply for a new HELOC limit |
The Rate Trade-off
The largest hidden cost of a readvanceable mortgage can be the mortgage rate itself. Banks that offer readvanceable products often price 0.10%-0.30% above monoline lenders (such as MCAP, First National or CMLS). On a $400,000 mortgage, a 0.20% rate premium costs roughly $3,800 over a five-year term. Whether the readvanceable feature is worth that depends on how you plan to use the HELOC.
Setting Up Sub-Accounts
Multiple HELOC sub-accounts let each borrowed amount have its own purpose, which matters for tracking tax-deductible versus non-deductible borrowing.
Example Sub-Account Setup
| Sub-account | Purpose | Tax-deductible? |
|---|---|---|
| Mortgage | Primary home loan | No |
| HELOC sub-1 | Investment borrowing | Yes |
| HELOC sub-2 | Rental property renovation | Yes |
| HELOC sub-3 | Personal use (renovation, emergency) | No |
The CRA looks at what borrowed money was used for. If you borrow $50,000 for investments and $20,000 for a kitchen renovation from the same HELOC, only the $50,000 portion generates deductible interest. Separate sub-accounts make this bookkeeping simple.
Important Considerations
Collateral Charge Registration
Readvanceable mortgages are registered as collateral charges, which raises the cost of switching lenders (a full discharge and re-registration), weakens your position at renewal and usually leaves no room for a second mortgage. The registration types, switching costs and lenders that use each are compared in collateral charge vs standard charge mortgages.
Interest-Only HELOC Payments
The HELOC component requires only interest payments; there is no mandatory principal repayment.
| Balance | Monthly interest payment (prime + 0.50%) |
|---|---|
| $50,000 | ~$206.25 |
| $100,000 | ~$412.50 |
| $200,000 | ~$825.00 |
| $300,000 | ~$1,237.50 |
Based on a prime rate of 4.45% (HELOC rate of 4.95%).
Without regular repayment of the HELOC, total debt can stay flat or grow while the mortgage declines. After 25 years, some borrowers are mortgage-free but carry a large HELOC balance with no forced repayment schedule.
Property Value Declines
If your property value drops, the lender may reduce your HELOC limit, a real risk if you rely on HELOC access for investing or other plans. The lender can also order a new appraisal and lower the facility limit.
How to Set Up a Readvanceable Mortgage
| Step | Details |
|---|---|
| 1 | Choose a lender from the product table above |
| 2 | Apply for the combined mortgage + HELOC facility |
| 3 | A property appraisal sets the maximum facility |
| 4 | The mortgage portion is set at the amount you need to borrow |
| 5 | HELOC room starts at $0 (or the gap between the mortgage and the combined limit) |
| 6 | As you make payments, the HELOC limit increases |
If you already have a standard mortgage and want a readvanceable one, you will need to refinance, which brings an appraisal, legal fees and possibly a penalty if you are mid-term. The steps are in how to refinance a mortgage.
Related Resources
Sources
The figures and rules on this page come from these sources, last checked against them between September 29, 2026 and October 2, 2026. How we check facts.
- CMHC: CMHC Refinance for Building Secondary Suites
- Financial Consumer Agency of Canada: Home equity lines of credit
- Justice Laws (Canada): Bank Act
- Justice Laws (Canada): Eligible Mortgage Loan Regulations
- OSFI: Residential mortgage underwriting practices and procedures