HELOC vs personal loan in Canada: which costs less and which is riskier?
Quick summary
A personal loan gives you a set amount that you repay on a schedule. It can be secured or unsecured. A HELOC is a credit line secured by your home, with a rate that can change. The key difference is what is at risk. With a HELOC your home is the security. Compare the payments with the loan payment calculator.
Checked November 9, 2026. Main source: FCAC: Personal loans (modified October 14, 2025, read November 9, 2026). See all 3 sources.
Key facts
- Personal loan size
- Typically about $100 to $50,000, over 6 to 60 months
- Source: FCAC, Personal loans
- HELOC limit
- Up to 65% of your home's value
- Source: FCAC, Home equity lines of credit
- Legal cap on annual cost of credit
- 35%
- Source: FCAC, Personal loans
HELOC vs personal loan side by side
| HELOC | Personal loan | |
|---|---|---|
| How you borrow | Up to your limit, repay and borrow again | A set amount, repaid on a schedule |
| Security | Your home | Secured (an asset such as a car) or unsecured |
| Rate | Most have a variable rate, often tied to prime | Fixed or variable, your lender must tell you which |
| Size | Up to 65% of your home's value | Typically about $100 to $50,000 |
| Length | No fixed end date | Typically 6 to 60 months |
| Who can get it | Homeowners with enough equity | Anyone the lender approves |
| If you cannot repay | The lender may take your home | A secured lender can take the asset, and an unsecured lender can take legal action |
Source: FCAC: Home equity lines of credit (modified October 15, 2025, read November 9, 2026). Source: FCAC: Personal loans (modified October 14, 2025, read November 9, 2026).
HELOC: pros and cons
- Pro: you pay interest only on what you borrow, and you can repay and borrow again.
- Pro: you can pay some or all of it back at any time.
- Con: your home is the collateral.
- Con: the rate can change, and rising rates make repayment harder.
- Con: interest-only payments do not reduce what you owe.
- Con: easy access to money can lead to borrowing too much.
Source: FCAC: Home equity lines of credit (modified October 15, 2025, read November 9, 2026).
Personal loan: pros and cons
- Pro: a set payment plan, so you know when the loan ends.
- Pro: an unsecured loan does not put your home on the line.
- Con: FCAC says higher rates and longer terms can greatly increase the total cost.
- Con: lenders may charge fees such as for early repayment or loan renegotiation.
- Con: FCAC says an unsecured loan that goes into default can lead to legal action, including withdrawing money from your account.
Source: FCAC: Personal loans (modified October 14, 2025, read November 9, 2026).
See what a personal loan costs in total
Type the amount, the rate and the length from your offer. Add any flat fees. The box shows the monthly payment, the total you repay and the interest. Nothing you type is saved or sent.
Personal loan cost
You borrow $15,000 and repay $18,960 in total.
That is $395.01 a month. The interest alone is $3,960.
Every $1 you borrow costs $1.26 to repay. The cost of borrowing is $3,960.
Nothing you type here is saved or sent. These are estimates. Your lender's contract is the final word, and it may add fees or insurance.
Rates and costs
FCAC says the total cost of a loan includes the amount you borrow, the interest and any other fees. Federal law caps the annual cost of credit at 35%.
We do not list lender rates. They change often and depend on your credit and your lender. Ask for the full cost before you sign, then put the rate and the term into the calculator.
Source: FCAC: Personal loans (modified October 14, 2025, read November 9, 2026). Source: FCAC: Home equity lines of credit (modified October 15, 2025, read November 9, 2026).
Which one may fit you?
| If this sounds like you | This may fit |
|---|---|
| You need one amount and want a set end date | A personal loan |
| You need money in pieces over time | A HELOC |
| You do not own a home or have little equity | A personal loan |
| You do not want your home at risk | A personal loan, or wait and save |
| You are tempted to spend whatever is available | Think twice about a HELOC |
This table is our plain summary of the differences above, not advice. A lender, an accountant or a credit counsellor can look at your whole situation.
Try it with your numbers
Enter the amount, the rate and the length of each option. Compare the monthly payment and the total interest.
Questions people ask
Is a HELOC cheaper than a personal loan?
It depends on the rates you are offered and how you repay. A HELOC is secured by your home, so its rate can differ from an unsecured loan. Ask for both rates and compare the total cost with our calculators.
Which is riskier, a HELOC or a personal loan?
A HELOC puts your home at risk. A secured personal loan puts the asset you pledged at risk. An unsecured loan can lead to legal action if you default.
How much can I borrow with a personal loan?
FCAC says typical personal loans range from about $100 to $50,000, with terms of 6 to 60 months.
How much can I borrow with a HELOC?
FCAC says you can generally borrow up to 65% of your home's value.
Can I use a HELOC to pay off debt?
Some people do. Check the rate, the payment and the risk. Your home becomes the security for the debt you move, and interest-only payments do not reduce the balance.
What do lenders check for a personal loan?
FCAC says they typically look for proof of regular income, a bank account and a permanent address. They also check your credit report and score and review your debts.
Is there a limit on what a loan can cost?
FCAC says federal law caps the annual cost of credit at 35%.
Is a HELOC rate fixed or variable?
FCAC says most HELOCs have a variable rate, often tied to the lender's prime rate.