HELOC vs. Refinance Calculator
You've got home equity and you need to access it. Should you open a HELOC at prime + 0.5% for flexibility, or refinance your mortgage at a lower rate for certainty? This calculator runs both scenarios so you can see the 5-year cost of each.
HELOC vs. Refinance Calculator
Compare accessing equity through a HELOC vs. a cash-out refinance at renewal.
Your $75,000 draw costs $372/mo via HELOC vs. $406/mo extra via refi. A broker models both with your lender.
A broker will confirm this with real lender quotes — for free.
How HELOCs Work in Canada (2026)
A HELOC is a revolving credit line secured against your home. Most Canadian HELOCs price at prime + 0.5% to prime + 1.0%. With Bank of Canada policy rate at current levels and prime around 4.70%, HELOC rates typically run 5.20%–5.70%. You draw funds as needed; you pay interest only on what you've drawn. Minimum payments are usually interest-only, meaning principal doesn't amortize unless you pay extra.
HELOCs are capped at a combined loan-to-value of 65% for the HELOC portion (80% if combined with an amortizing mortgage), per OSFI B-20 rules. They require the full stress test at application.
How Refinances Work in Canada (2026)
A refinance rewrites your existing mortgage at a new rate and term, typically to a fixed or variable amortizing structure. Today's 5-year fixed refinance rates are around 4.19%; 5-year variables sit near prime minus small discounts. You receive a lump sum (the difference between your new mortgage amount and your existing balance, minus fees) and a new amortization schedule.
Refinance costs include legal/registration, appraisal, and — if you're breaking a closed term early — a prepayment penalty. Refinancing is subject to the full stress test.
HELOC Pros and Cons
Pros
- Draw only what you need, when you need it
- Interest only on drawn balance
- Reusable — repay and redraw repeatedly
- No prepayment penalty, ever
- Fast setup, minimal ongoing fees
Cons
- Rate ~1.5–2.5% above 5-yr fixed refinance
- Variable rate — no long-term certainty
- Interest-only minimum means no automatic paydown
- Typically registered as collateral charge
- Lender can freeze or reduce limit in stressed markets
Refinance Pros and Cons
Pros
- Lower rate than HELOC (often 1.5–2.5% less)
- Fixed rate option for 5-yr certainty
- Amortizing payments — builds equity automatically
- Best for large, long-term borrowing
Cons
- Stress test required — not all borrowers qualify
- Legal / appraisal costs ~$1,000–$2,000
- Possible prepayment penalty mid-term
- Less flexible — fixed draw at closing
- Longer to set up than a HELOC
Frequently Asked Questions
What's the difference between a HELOC and a refinance? +
A HELOC (Home Equity Line of Credit) is a revolving credit line secured by your home, typically at prime + 0.5% to prime + 1%. You draw funds as needed and only pay interest on what you use. A refinance rewrites your existing mortgage at a new rate and term — usually at a fixed or variable amortizing rate lower than HELOC rates. Refinances provide a lump sum and a fixed repayment schedule; HELOCs provide flexibility but at a higher rate.
When is a HELOC the better choice? +
HELOCs win when you need access to funds over time (renovation draws, tuition across years, business capital), when the amount you'll actually use is much less than the facility size, or when you expect to repay quickly. Because you only pay interest on drawn balances, a HELOC used for 3–6 months of bridge financing typically costs less than refinancing to a new 5-year term plus penalty.
When is a refinance the better choice? +
A refinance beats a HELOC when you need a large lump sum that will stay outstanding for years (debt consolidation, major renovation funded upfront, tax obligations). Refinance rates are typically 1.5%–2.5% below HELOC rates — on $100,000+ borrowed long-term, that savings dwarfs the one-time refinance costs (legal, appraisal, possibly prepayment penalty).
Can I have both a HELOC and a mortgage? +
Yes — that's how readvanceable mortgages (BMO Homeowner ReadiLine, RBC Homeline, National Bank All-in-One, CIBC Home Power Plan, Scotiabank STEP) work. The mortgage portion amortizes while a HELOC sits alongside with a limit that grows as the mortgage is paid down. These are typically registered as collateral charges, which reduces switching flexibility at renewal.
Does refinancing trigger the stress test? +
Yes. Any refinance — whether you're taking equity out, consolidating debt, or extending amortization — is subject to the full OSFI B-20 stress test at the Minimum Qualifying Rate (greater of contract rate + 2% or 5.25%). HELOCs are also subject to the stress test since the 2017/2018 rule updates. Straight mortgage renewals (no new money) are exempt post-November 2024.
Related Guides
Canadian HELOC Guide
HELOC qualifying, rules, and when to pair it with a renewal.
Readvanceable Mortgages
How readvanceable mortgages with HELOC sub-accounts actually work.
Mortgage Refinance in Canada
When a full refinance beats a simple renewal — rules and costs.
Renewal vs. Refinancing
When a renewal is enough and when a refinance makes more sense.
Debt Consolidation Refinance Calculator
See the cash-flow impact of rolling debt into your mortgage.
Smith Manoeuvre at Renewal
Converting mortgage interest into tax-deductible interest.
Which Product Is Right for Your Situation?
A licensed mortgage broker can compare HELOC and refinance quotes across 30+ lenders — free, no obligation.