Can I Use a HELOC to Pay Off My Mortgage Faster?

Posted on 7th January 2019

Homeowners are always looking for ways to pay down their mortgage the quickest way possible. And for good reason, the faster you pay it off, the less interest you end up giving the bank. This desire to save money has led people to come up with some strange, complex, and confusing ways to get out of debt quicker. One seemingly popular method involves using a home equity line of credit (HELOC) to make additional mortgage payments. But, as you’ll see, just because something works on paper doesn’t mean it will work well in real life. When it comes to paying off your mortgage faster, the best financial strategies are usually the simplest ones.

What Is a HELOC?

A HELOC is a revolving line of credit that is secured against the equity you’ve built up in your home. The HELOC comes with an adjustable interest rate that will go up and down with the markets.

The Bank of Canada has been raising its key lending rate and has said it has no plans on slowing down those plans. That means it’s getting more and more expensive to borrow money.

Like any line of credit, the HELOC is deposited into an account, and you can take out as much or as little as you like, whenever you like. There are no fixed repayment amounts, lenders only require you to make monthly interest payments on the equity you’ve accessed.

Is a HELOC Your Best Option for Paying Off a Mortgage?

The short answer to this question, is no. Technically, you can use the money in your HELOC for anything: renovations, vacation, car, tuition, etc. But using a HELOC to pay down your mortgage isn’t a sound financial idea.

According to one strategy, you can use your HELOC to pay off your mortgage in just a few years. But it’s not as simple as it sounds. There are also some doubts as to whether it really works or not.

As we all know, life rarely, goes according to plan, 100% of the time. Using a HELOC to pay down your mortgage could get easily derailed if you’re hit with an unexpected expense, or financial stress, like the loss of a job or reduction in pay.

A HELOC comes with a variable interest rate, meaning it fluctuates. At the same time, the vast majority of Canadian home owners have a mortgage with a fixed rate. With the above strategy, you’re exchanging a fixed mortgage rate with a variable HELOC rate. Variable interest rates are on the rise are expected to make significant jumps over the coming years.

Balancing a HELOC, managing your spending, and dealing with interest payments can be difficult for the most disciplined person. People refinance with a HELOC or home equity loan (second mortgage) to simplify their lives, not make them more confusing and susceptible to financial hardships.

Better Ways to Pay Off Your Mortgage Early

Pay More Than the Monthly Minimum Payment

Paying more than the scheduled minimum each month can help greatly reduce the time it takes to pay down a mortgage. Depending on the lender, you should have several repayment options. Reducing the principal helps reduce interest payments, which can save you tens of thousands of dollars in interest payments over the life of the mortgage.

Make at Least One Extra Payment Annually

An alternative to making higher payments is to make at least one extra mortgage payment each year. If you have a 30-year mortgage and make just one extra annual payment, you’ll slash the mortgage down to 26 years.

Refinance to Reduce Interest

Lower interest rates are the most popular reason to refinance a mortgage. More of a mortgage payment goes toward the principle, which means it gets paid off faster, with less going to interest payments. Having a lower monthly mortgage payment can also help free up money that can be used for day-to-day expenses., Helping You Pay Down Your Mortgage Quickly

If you’re thinking of refinancing a mortgage or looking to take out a HELOC or home equity loan, the licensed mortgage specialists at can help you find the best financial product with the best terms and rates.

Why should you choose over the country’s big banks and other private lenders? The mortgage experts at are independent, which means they’re looking after your best interest. Traditional lenders will only push their own products and services, even if it’s not in your best interest.

The independent mortgage professionals at have access to hundreds of different lenders. Many specialize in helping homeowners with bad credit, no credit, and unreliable income, refinance their mortgage.

To find out what kind of mortgage or refinancing options are available to you, contact today or apply online and a mortgage specialist will set up an appointment at your earliest convenience.

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