Free Canada HELOC and personal line of credit calculator. Compare interest-only vs principal plus interest payments. Shows impact of prime rate changes.
Calculate monthly payments on a Canadian HELOC or line of credit.
Monthly interest-only payment
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Monthly P+I payment
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Annual interest (interest-only)
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Effective rate
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Your breakdown
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How variable-rate lines of credit work in Canada
Canadian HELOCs and lines of credit are variable-rate revolving facilities. The rate is set by the lender as prime plus a spread, meaning the rate moves whenever the Bank of Canada changes the overnight rate. There is no fixed repayment schedule: you can borrow, repay, and borrow again up to your limit. The minimum required payment is typically only the interest that accrued in the month, which gives maximum cash flow flexibility but no built-in mechanism to pay down principal. This contrasts with a fixed-term loan or mortgage where each payment reduces the outstanding balance according to an amortization schedule.
Interest-only versus principal-plus-interest: the true cost gap
Making only the minimum interest payment on a line of credit keeps the balance exactly where it started. A $100,000 HELOC at 5.70 percent costs $475 per month in interest but the balance never drops. Over 10 years you will have paid $57,000 in interest with $100,000 still owing. If instead you amortize the same balance over 10 years with a principal-plus-interest payment, your monthly payment rises to about $1,077 but the balance reaches zero at the end. The difference in total interest paid is roughly $29,000. Making regular lump-sum or top-up payments above the minimum is an effective middle ground that accelerates paydown without committing to a fixed higher payment.
When a HELOC makes sense and when it is a trap
HELOCs are valuable tools for home renovation financing (the investment stays in the asset), bridging large but temporary cash flow gaps, and as part of the Smith Manoeuvre strategy where HELOC interest on investment borrowing is tax-deductible. They become problematic when used to fund consumption, lifestyle spending, or to carry revolving balances without a clear payoff plan. The flexibility that makes them useful also makes them easy to carry indefinitely, and at $100,000 plus the interest cost compounds significantly over years. If your HELOC balance has not moved in 12 months, treat it like any other consumer debt and build a paydown plan.
Frequently asked questions
What is the Bank of Canada prime rate in 2025?
The Bank of Canada target overnight rate and the resulting prime rate change over time. As of mid-2025 the prime rate at major Canadian banks is approximately 5.20 percent following a series of rate cuts from the peak of 7.20 percent in 2023. Most HELOCs are priced at prime plus 0.50 percent, putting typical HELOC rates around 5.70 percent. Personal lines of credit are generally priced higher, often at prime plus 3 to 5 percent. Enter your specific rate in the calculator for an accurate result.
What is the difference between a HELOC and a personal line of credit?
A HELOC (Home Equity Line of Credit) is secured by your home. Because the lender has collateral, rates are much lower, typically prime plus 0.50 to 1 percent. The maximum HELOC amount in Canada is 65 percent of your home value (the combined mortgage and HELOC cannot exceed 80 percent of the home value). A personal line of credit is unsecured. Rates are higher, often prime plus 3 to 8 percent, and approval limits are lower. Both are revolving credit facilities with no fixed repayment schedule, but HELOCs have significant advantages for homeowners with available equity.
How does interest-only repayment work on a line of credit?
Most Canadian lines of credit require only the accrued interest as the minimum monthly payment. There is no required principal repayment. This makes the minimum payment very low but means your balance does not decrease unless you voluntarily pay down principal. If your HELOC balance is $100,000 at a rate of 5.70 percent, the monthly interest is $475 and that is all you must pay. You can choose to pay more, but the minimum is just the interest. This flexibility is useful for cash-flow management but can lead to carrying a balance indefinitely.
Can the Bank of Canada rate change affect my HELOC payment significantly?
Yes, significantly. Because HELOCs are variable-rate products priced off the prime rate, every rate change from the Bank of Canada flows directly to your payment. A 1 percent rate increase on a $200,000 HELOC raises the monthly interest payment by $167. Rate changes in 2022 and 2023 moved prime by more than 4 percentage points, which would have added $667 per month to that balance. This is the core risk of carrying a large HELOC balance, and the calculator lets you model different rate scenarios.