How Is Interest Calculated on a Home Equity Line of Credit (HELOC) in Canada?
Learn how interest is calculated on a Canadian HELOC, including daily balance methods and variable rates tied to prime plus margin.
Video transcript
Interest on a home equity line of credit (HELOC) in Canada is calculated based on the daily balance of the line of credit. Typically, the interest rate is variable and tied to the lender's prime rate plus a margin. To calculate daily interest, the annual interest rate is divided by 365 days and then multiplied by the daily balance. The sum of these daily amounts is then charged monthly. Always check with your lender for specific details and terms applicable to your HELOC.
Questions and answers
What affects the interest rate on a HELOC in Canada?
The interest rate on a HELOC in Canada is typically variable and based on the lender's prime rate plus a margin that depends on your creditworthiness and lender policies.
How often is HELOC interest charged?
Interest on a HELOC is calculated daily based on the outstanding balance and charged monthly to your account.
Can the interest rate on a HELOC change?
Yes, the interest rate on a HELOC is usually variable, meaning it can change whenever the lender's prime rate changes.
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