A Home Equity Line of Credit (HELOC) lets you borrow against your home’s equity at a variable rate tied to prime. Most Canadian HELOCs allow interest-only payments, which keeps your monthly cost low but means your balance never shrinks.
Interest-only trap
On a $75,000 HELOC at 7.45%, the interest-only minimum is ~$466/month, about $5,600/year, all pure cost. After 10 years of interest-only payments you’ve paid $56,000 and still owe the original $75,000. Switching to a payoff schedule is usually the smart call once rates normalize.
HELOC vs home equity loan
A HELOC is revolving credit; a home equity loan is a fixed-term installment loan. HELOCs offer flexibility but typically at a higher rate. For a lump-sum need with a fixed payoff, the home equity loan (usually a readvanceable component of a mortgage) is more structured.