HELOC & Second Mortgage Calculator — Interest-Only Payment Estimate

What Does This HELOC Calculator Show?

The HELOC payment calculator produces two payment figures for a home equity line of credit: the interest-only minimum payment (what most Canadian HELOC borrowers pay monthly) and the fully amortizing payment (the amount needed to pay off the balance over a chosen period). It also estimates your payoff timeline if you add a fixed principal amount above the interest-only minimum each month. For second mortgages, the calculator shows the fixed monthly payment at any rate and amortization period you input.

Interest-Only vs. Principal + Interest Mode

Most Canadian HELOCs require only the interest-only minimum each month. The calculator's interest-only mode shows exactly how much of your payment is interest — and confirms that without voluntary principal payments, your balance never decreases. Switch to principal + interest mode to see the fixed monthly payment needed to clear the balance over a set number of years.

HELOC Payoff — Paying Down Your Line Early

The payoff section shows what happens when you add a fixed voluntary principal payment each month on top of the interest-only minimum. Enter any additional monthly amount to see how quickly the balance drops, when the HELOC is fully paid off, and how much total interest you save compared to making only minimum payments.

How HELOC Payments Work in Canada

Most Canadian HELOCs require only interest-only minimum payments — you are not required to pay down the principal each month. The interest-only payment is calculated as: (outstanding balance × annual interest rate) / 12. On a $100,000 HELOC at 7.45% (prime plus 0.50%), the monthly interest-only payment is approximately $621. The interest portion changes each month as your balance fluctuates. Canadian HELOC rates are variable and tied to the lender's prime rate, which moves with the Bank of Canada's policy rate.

The Interest-Only Payment Formula

The formula is straightforward: monthly interest-only payment = (balance × annual rate) ÷ 12. This uses simple monthly compounding — unlike Canadian mortgages, which use semi-annual compounding under the Interest Act. HELOCs are lines of credit, not mortgages, so interest accrues monthly on the outstanding balance. On a $100,000 HELOC at 7.45%: ($100,000 × 0.0745) ÷ 12 = $620.83, rounded to $621 per month.

Variable Rate — Prime Plus Your Lender's Spread

Canadian HELOC rates are quoted as prime rate plus a lender-specific spread, typically ranging from prime + 0.50% to prime + 1.00% at major banks. When the Bank of Canada raises or lowers its policy rate, the prime rate moves in step, and your HELOC payment adjusts accordingly. A 1% increase on a $200,000 HELOC adds $167 per month in interest charges.

How Much Can You Borrow on a HELOC in Canada?

Canadian HELOCs are regulated by OSFI Guideline B-20. A standalone HELOC can be at most 65% of your home's appraised value. Combined with an existing mortgage, the total of your mortgage balance plus HELOC cannot exceed 80% of the home's value. For example: on a $700,000 home, the maximum standalone HELOC is $455,000. If you have a $400,000 mortgage balance, the maximum HELOC is $160,000 ($700,000 × 80% − $400,000). Readvanceable mortgages combine a mortgage and HELOC in a single product up to the 80% combined limit.

65% LTV Cap on Standalone HELOCs

OSFI's 65% cap applies to all federally regulated lenders in Canada. Even if you have significant equity, your HELOC limit cannot exceed 65% of the current appraised value. If your home value falls, your lender can reduce your HELOC limit — or freeze it — to stay within the 65% ceiling. Credit unions, which are provincially regulated, may operate under different rules.

80% Combined LTV With a Readvanceable Mortgage

A readvanceable mortgage automatically increases available HELOC room as mortgage principal is repaid — keeping the combined borrowing at up to 80% of the home's value without requiring a new application or appraisal. Products like Scotia Total Equity Plan and RBC Homeline are examples of readvanceable mortgages. The combined mortgage + HELOC cannot exceed 80% of home value under OSFI B-20. HELOCs use similar qualification logic to a primary mortgage — see our mortgage qualification guide for income, debt, and equity requirements.

HELOC vs. Second Mortgage — Key Differences

A HELOC is a revolving line of credit — you draw, repay, and redraw up to your limit, paying interest only on what you use. A second mortgage is a fixed lump sum at a fixed or variable rate with required principal-and-interest payments over a set term. HELOCs typically carry variable rates at prime plus a small spread; second mortgages usually carry higher rates than first mortgages, reflecting subordinate lien risk. HELOCs offer more flexibility; second mortgages offer payment certainty.

HELOC Payoff Calculator — Paying Down Faster

Because a HELOC requires only interest-only payments, a $100,000 balance at 7.45% never gets paid down unless you voluntarily add principal payments. Adding $500 per month in principal on top of the interest-only minimum pays off a $100,000 HELOC in approximately 17 years (200 months) and reduces total interest paid to approximately $62,000 — compared to $621 per month forever with no payoff date on the interest-only minimum. The payoff calculator above shows the exact timeline and total interest for any principal addition amount you choose.

Adding Principal Payments Above the Interest-Only Minimum

Any dollar above the interest-only minimum goes directly to reducing your balance. Because interest accrues on the declining balance, each principal payment reduces the next month's interest charge — creating a compounding benefit. The more consistently you pay above the minimum, the faster the payoff accelerates in the later months.

How Long to Pay Off a HELOC With Regular Principal Payments

Unlike a fixed-rate mortgage with a defined amortization schedule, HELOC payoff timelines depend entirely on how much voluntary principal you add each month. The table below shows the payoff timeline and total interest for four levels of monthly principal additions on a $100,000 HELOC at 7.45%.

Assumes no change in balance (no new draws). Interest calculated on declining balance using simple monthly rate (annual rate ÷ 12).