When a HELOC fits
You draw only what you use and pay interest on that balance. That suits staged renovations, an emergency buffer, or a business with lumpy cash flow. The rate floats with prime, so payments move when the Bank of Canada moves.
When a refinance fits
You take a lump sum at a fixed or variable term rate with a set amortization. That suits consolidating high-interest debt or funding a known project cost, because the payment is disciplined and the rate is typically lower than a line of credit.
- Consolidating cards and unsecured lines into one payment
- A single large renovation with a firm quote
- Buying out a partner or a family estate share
- Down payment on a second property
The limits
Refinancing generally allows borrowing up to 80 percent of the property's value, and a HELOC portion is capped lower. An appraisal establishes the value, and both routes require requalifying on income.
The combination most people end up with
Many files end with a readvanceable setup: a mortgage portion for the known cost and a line of credit portion for flexibility later. It is worth pricing both against the penalty on your current mortgage before deciding.
Frequently asked questions
- Do I need to break my mortgage to get a HELOC?
- Not always. A second-position line of credit is possible with some lenders, though rates are higher than a first position.
- How much equity do I need?
- Plan on keeping at least 20 percent of the value untouched after borrowing.
- Is the interest deductible?
- Only when the funds are used to earn income. Keep the borrowing separate and talk to your accountant.
Talk to a Toronto private mortgage specialist
We arrange equity-based financing across Toronto and the GTA, whether you need a first position from a private lender or a second mortgage behind the bank you already have.