Pros and Cons of a Home Equity Line of Credit
(HELOC)
Dec 2025 | Pros and Cons of a Home Equity Line of Credit (HELOC)
If you’re a Canadian homeowner, you’ve probably heard friends or family talk about using a home equity line of credit, or HELOC, to renovate, consolidate debt, or help kids with school costs. A HELOC can be a powerful financial tool, but it can also create stress if it’s used without a good plan. Let’s walk through the key pros and cons so you can decide if it fits your goals.
How a HELOC Works
A HELOC is a revolving line of credit secured against your home. You’re approved for a maximum limit based on your home’s value and your remaining mortgage, and you can borrow, repay, and borrow again as needed. This flexibility is one of the biggest advantages.
The Main Benefits
You only pay interest on what you actually use, which can help with cash flow for projects that happen in stages, like a major renovation. Another plus is cost: HELOC interest rates are usually lower than credit cards and personal loans because the debt is backed by your property. Used wisely, that can make it an attractive way to consolidate higher-interest balances into one, more manageable payment.
The Key Risks
However, there are important downsides to weigh. Because your home is the collateral, falling behind on payments can put your property at risk. HELOC rates are typically variable, so if interest rates rise, your monthly payments can increase quickly, which may squeeze your budget.
Is a HELOC Right for You?
The easy access to funds can also tempt people to treat the HELOC like an endless ATM, slowly turning short-term borrowing into long-term, hard-to-clear debt. A HELOC tends to work best when you have stable income, a clear purpose for the money, and a realistic repayment plan. It may be less suitable if your cash flow is uncertain or if you’re close to retirement and prefer fixed, predictable payments.
Talk to Sandra Before You Decide
If you’re considering a HELOC, reach out to Sandra for a friendly, no-pressure review of your options so you can use your home equity confidently and safely.
