What is a HELOC and how does it work?
Updated: February 28, 2026CanadaFAQPrivate lending
Quick Summary
A HELOC (home equity line of credit) is a revolving credit line secured by your home. You can borrow, repay, and borrow again up to a limit, and the interest rate is often variable.
A HELOC can be flexible, but it still puts your home on the line.
How a HELOC works
- You get an approved limit based on Equity and lender guidelines.
- You can draw funds as needed and pay interest on the amount used.
- Payments are often Interest-Only during the revolving phase (confirm your lender’s terms).
Common uses
- Renovations.
- Emergency liquidity.
- Debt consolidation (with a plan).
Risks to understand
- Variable rates can rise.
- Easy access can lead to persistent balances.
- Lenders can change limits or conditions if your situation or the market changes.
If you need a lump sum and a fixed schedule, a Home Equity Loan or refinance may be a better fit than a revolving line.