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Finding the Best HELOC Rate in Canada: Prime, Margins and Fees

Updated

A home equity line of credit (HELOC) is priced as the lender’s prime rate plus or minus a margin, so the best HELOC rate is the lowest margin a lender will offer you, before fees. This page explains how that pricing works, what five Canadian lenders publish about their HELOCs, and the criteria it uses to compare offers: the margin over prime, the fees, the borrowing limit and the payment terms. It is part of WealthNorth’s refinancing and home equity guide; the HELOC calculator estimates your limit and payments.

How a HELOC rate is set

The Financial Consumer Agency of Canada (FCAC) describes the pricing in three points: most HELOCs have a variable interest rate; a variable rate is typically based on the lender’s own prime rate; and you may be able to negotiate the rate with the lender. FCAC also notes that a lender may change a HELOC’s rate at any time, and that a federally regulated lender must give written notice within 30 days of making the change.

Each bank sets its own prime rate. The Bank of Canada publishes the chartered banks’ prime rate: 4.45% as of 2026-09-30, with the Bank of Canada’s policy rate at 2.25%. The prime rate guide explains how the two are linked.

Example: a HELOC priced at prime plus 0.50 would cost 4.95% (4.45% + 0.50) at the Bank of Canada’s published prime. On a $100,000 balance that is $412.50 of interest a month ($100,000 × 4.95% ÷ 12). Your own margin comes from the lender’s offer.

What lenders publish about their HELOCs

Lenders publish how the rate is set, not one rate for everyone. The table quotes each lender’s own product page, read on October 1, 2026; product terms change, so check the lender’s page before applying.

ProductHow the rate is setBorrowing limit stated by the lender
RBC Homeline PlanThe Royal Credit Line portion has a variable rate that may rise and fall with RBC’s prime rateUp to 80% of the home’s value in total; the credit line grows as the mortgage is paid down, up to 65%
TD Home Equity FlexLineThe revolving portion uses a variable interest rate based on TD Prime Rate, with an interest-only minimum monthly paymentUp to 80% of the home’s value
Scotia Total Equity Plan (STEP)Not stated as a single rate on the product pageUp to 80% at first, including up to 65% in line of credit products; the plan then steps down to 65% over 25 years
National Bank All-In-OneRate: variable and corresponds to Prime plus a margin; a flat fee of $7.00 a month per accountLine of credit up to 65% of the property’s value, up to 80% combined with a mortgage loan
Tangerine Home Equity Line of CreditRate: the Tangerine Prime Rate plus or minus an adjustment factor, set out in the borrower’s agreementNot stated on the product page

The RBC, Scotiabank and National Bank products are readvanceable: the line of credit grows as the mortgage is repaid.

Criteria for comparing HELOC offers

  • Margin over prime. Two “prime plus” offers can differ in the margin and in whose prime rate they use. Compare the full rate each lender quotes you.
  • Fees. FCAC lists the fees a HELOC may involve: home appraisal fees, legal fees to register your home, title search fees, administration fees and monthly fees, plus cancellation and discharge fees if you close it. Ask each lender which apply and who pays them.
  • Structure. A standalone HELOC is independent of your mortgage; a HELOC combined with a mortgage (readvanceable) has to be with the lender that holds the mortgage, and its available credit grows as you repay the mortgage, according to FCAC.
  • Payment terms. FCAC says a lender may require payments of only the interest, or of principal and interest. An interest-only minimum keeps the payment low but doesn’t reduce the balance.
  • What the lender will ask for. FCAC lists proof of home ownership, your mortgage details, a home appraisal and a lawyer (or notary in Quebec) to register the home as collateral. Your credit score and income also affect the offer.

How much you can borrow

At a federally regulated lender, two limits apply: the revolving part of a HELOC can't exceed 65% of the home's value, and everything borrowed against the home (the mortgage plus the HELOC, or a refinanced mortgage) can't exceed 80% of its value. HELOC room is therefore the lower of 80% of the value minus the mortgage and 65% of the value. Mortgage insurance can't take a refinance above 80%, except a refinance to build secondary suites that takes no equity out. FCAC lists the equity you need: more than 35% for a standalone HELOC and at least 20% for a HELOC combined with a mortgage.

Example: a $700,000 home with $350,000 left on the mortgage.

StructureTotal borrowing allowedRoom left after the $350,000 mortgage
Standalone HELOC (more than 35% equity left)Just under $455,000 ($700,000 × 65%)Just under $105,000
HELOC combined with the mortgage (20% equity left)$560,000 ($700,000 × 80%)$210,000, with the revolving part capped at $455,000

The lender sets the home’s value, usually with an appraisal, and can approve less than these amounts.

Qualifying for a HELOC

FCAC says you must pass a stress test to qualify for a HELOC at a bank. Lenders check that you could afford the payments at the greater of your contract rate plus 2% or 5.25%, a floor set by OSFI for uninsured mortgages and by the federal government's mortgage insurance rules (the Minister of Finance's Eligible Mortgage Loan Regulations) for insured ones. Lenders also check your debt service ratios; the GDS and TDS guide explains how they are calculated, and the stress test guide shows the qualifying rate at current rates.

Rate risk

A variable HELOC rate moves when the lender changes its prime rate, which FCAC says may happen when the Bank of Canada changes its policy rate. The policy rate peaked at 5.00% on July 12, 2023 and is 2.25% now, a gap of 2.75 percentage points.

Example: if a HELOC rate rose by that 2.75-point gap, a $100,000 balance would cost $2,750 more interest a year ($100,000 × 2.75%).

FCAC lists rising rates among the risks of a HELOC, along with losing your home if you don’t repay, easy access to credit, and that paying only the interest won’t pay off the loan. OSFI’s Guideline B-20 also expects federally regulated lenders to review a HELOC’s authorized amount when the home’s value falls materially or the borrower’s finances change materially, so a limit isn’t guaranteed to stay where it was set.

Common uses and their trade-offs

Renovations in stages. Interest is charged only on the amount drawn, from the day it is drawn (FCAC), which fits costs paid over several months. Renovation financing options are compared in home renovation loans.

Consolidating debt. Moving higher-rate debt to a HELOC lowers the rate but secures the debt on your home and, with an interest-only minimum, sets no payoff date. Debt consolidation using home equity covers the options.

Borrowing to invest. Interest is deductible when the borrowed money is used to earn income from a business or property, such as rent, interest or dividends, whatever secures the loan; it follows the money's current use, which you must be able to trace, and it isn't deductible on money used personally, on money borrowed for an RRSP, TFSA or FHSA contribution, or on an investment that can only produce capital gains. To come out ahead, the investments’ after-tax return has to exceed the after-tax cost of the interest: compare both sides after tax, not a pre-tax return with an after-tax cost.

Example: at a 6.00% HELOC rate and a 40% marginal tax rate, deductible interest costs 3.60% after tax (6.00% × (1 − 0.40)). An investment paying fully taxable interest income keeps 3.60% of a 6.00% return after the same 40% tax, so it only breaks even at a pre-tax return of 6.00%, before any allowance for risk.

The Smith Manoeuvre guide covers the readvanceable-mortgage version of this strategy.

A standby credit line. A HELOC you don’t draw on carries no interest, though FCAC lists administration and monthly fees among the costs a HELOC can have.

Sources

The figures and rules on this page come from these sources, last checked against them between September 25, 2026 and October 2, 2026. How we check facts.