HELOC Calculator

What the HELOC Calculator does

It sizes a home equity line of credit against the two ceilings that actually govern one, prices it at prime plus your spread, and then costs three different ways of repaying the same draw over the same horizon so they can be compared honestly.

The part most lender calculators leave out is what interest-only actually costs. A minimum payment that never touches the balance is not a cheap loan; it is an expensive one with a comfortable monthly figure. This page puts that number next to the alternative and shows both the cash and the cost, because they point in opposite directions.

• Your maximum line under the 65% revolving cap and the 80% combined ceiling
• Which of those two ceilings is actually binding on your numbers, and by how much
• Three repayment approaches costed over one horizon on the same basis
• What ten years of interest-only really costs, with the balance still outstanding
• What happens to the payment if prime rises one, two or three points
• The amortizing payment a lender underwrites you on, which is not the one you pay

The 65% rule almost every calculator gets wrong

There are two different ceilings on home equity lending and they are constantly confused, including by tools that should know better. A combined mortgage-and-line facility can be advanced up to 80% of your home’s value. But the revolving portion — the part that never has to be repaid on a schedule — is separately capped at 65% of value. Anything between those two figures can only be advanced as an amortizing mortgage segment, not as a line you can draw and redraw.

The distinction is invisible on typical numbers. When your mortgage is more than 15% of your home’s value, the 80% ceiling is the tighter of the two and the 65% cap never comes into play. That covers most homeowners, which is exactly why the error survives casual checking.

It stops being invisible for the person most likely to be shopping a large line: the owner who has nearly paid the mortgage off. On a $950,000 home with $50,000 still owing, the combined ceiling suggests $710,000 of available line. The real answer is $617,500. A calculator that quotes the first figure has overstated the line by $92,500, and you find out at the lender.

• The revolving line is capped at 65% of value, whatever else is registered
• The 80% figure governs the whole facility, never the line on its own
• The two only diverge when the mortgage is under 15% of value
• Which means the error is largest for owners with the most equity
• The page tells you which ceiling is binding rather than just showing a number

A HELOC does not compound like your mortgage

Canadian fixed-rate mortgages are compounded semi-annually, not in advance — that is statute, not convention, and it is why the periodic rate is i = (1 + r ÷ 2)^(2 ÷ n) − 1 rather than simply r ÷ 12. A HELOC is not a fixed mortgage in that sense. It compounds monthly, so its periodic rate really is the annual rate divided by twelve.

Applying the mortgage conversion to a line of credit understates what it costs. The gap is small on any single payment and compounds into something visible over a decade, and it is the single most common error a mortgage calculator can make on this particular product. Every figure on this page uses monthly compounding.

• HELOC periodic rate: the annual rate ÷ 12
• Interest-only payment: the drawn balance × that rate
• Amortizing payment: the standard level-payment formula, at the monthly rate
• Interest accrues only on what you have drawn, never on the limit

Interest-only is a minimum payment, not a plan

Most lines default to an interest-only minimum, and that default explains why HELOC balances so often sit unchanged for years. Pay exactly the interest and the balance is exactly where it started — not smaller, not larger, just still there.

The comparison that matters is not between payments. It is between costs, and cost means the cash you hand over plus whatever you still owe at the end, less what you borrowed at the start. On that basis interest-only on a $75,000 draw runs to roughly $40,900 over ten years with the full $75,000 still outstanding. Amortizing the same draw over the same ten years costs about $22,500 in interest and leaves you owing nothing.

That comparison has to be stated in both directions to be fair. Amortizing takes considerably more cash out of your account each month — that is a real constraint and for some households a decisive one. It costs far less overall. Both things are true at once, and the page shows both rather than picking the flattering half.

• Interest-only leaves the balance exactly where it started, indefinitely
• Cost is cash paid plus what you still owe, less what you borrowed
• Amortizing costs more cash per month and much less money in total
• Paying interest plus a fixed amount of principal is usually cheapest of the three
• The page costs all three over one horizon so the comparison is like for like

The rate can move, and there is nothing to renew

A HELOC has no rate hold and no term. The rate is prime plus your spread, and it changes the day the Bank of Canada moves — no renewal date, no notice period, no opportunity to shop it first. That is the price of the flexibility.

Prime is identical at every lender, so the spread is the only part worth negotiating. Credit strength, income documentation and loan-to-value all move it, and a strong file at low LTV can see prime flat or better. Ask what spread you are being offered rather than what prime is; the second number tells you nothing about the lender.

The sensitivity table is not a stress-test formality. Canadian prime moved more than three points between early 2022 and mid-2023. If a plus-three scenario would break your budget on the balance you intend to carry, that is worth knowing before you draw rather than after.

• The rate reprices automatically when prime moves — no renewal, no notice
• Only the spread is negotiable, because prime is the same everywhere
• A move of three points is recent history, not a hypothetical
• Check the shock scenario against the balance you actually plan to carry

Using your results well

A line costs nothing to hold and everything to misuse. Arranging one while you comfortably qualify — steady income, strong credit, low loan-to-value — and leaving it undrawn is sound and common advice. The trap only closes once you draw and let the balance sit.

Note too that lenders generally qualify a line on an amortizing payment at a stress-tested rate rather than the interest-only minimum you would actually pay. Your approved limit can therefore come back smaller than the equity arithmetic alone suggests, which is worth anticipating rather than discovering.

This page deliberately gives no tax advice. Whether HELOC interest is deductible turns entirely on what the borrowed money was used for — funds used to earn investment or business income may qualify, personal spending does not, and mixing both in one line creates a tracing problem that needs a professional rather than a calculator.

• Arranging a line before you need it costs nothing while it stays undrawn
• Decide the repayment approach deliberately — the default is the expensive one
• Expect to be qualified on an amortizing payment, not the interest-only minimum
• Test the plus-three scenario against your real budget before drawing
• Take any deductibility question to an accountant before you draw, not after