For many Ontario homeowners, a home equity line of credit (HELOC) is one of the most flexible ways to borrow money. You can tap into your home’s value when you need it — whether it’s for debt consolidation, home renovations, or managing unexpected expenses. But what if your credit score isn’t great? Can you still get a HELOC with bad credit in Ontario?

The short answer is: yes, it’s possible — but not through every lender, and not without some trade-offs. In this article, we’ll break down how HELOCs work, how credit scores affect your chances, and what options are available if your credit isn’t ideal.

What is a HELOC?

A HELOC (home equity line of credit) is a revolving credit account that’s secured against your home. It works like a credit card, but with much lower interest rates — and a much higher limit, since it’s tied to your home’s value.

You can borrow up to 65% of your home’s value through a HELOC alone, or up to 80% if it’s combined with a mortgage (this is sometimes called a readvanceable mortgage). With a HELOC:

You only pay interest on what you actually use

The interest rate is variable and usually lower than credit cards or personal loans

You can re-borrow what you’ve paid back, without applying again

Payments are interest-only by default, though you can pay down principal at any time

Because it’s secured by your home, lenders consider a HELOC a lower-risk form of lending — but they still look closely at your credit profile when deciding whether to approve you.

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What Counts as “Bad Credit” in Ontario?

In Canada, credit scores range from 300 to 900. Here’s a rough breakdown:

Excellent: 720+

Good: 650–720

Fair: 551–649

Poor: 300–550

Most banks and credit unions want to see a score of 680 or higher to approve a HELOC. That’s because they see it as a sign that you’ve handled debt responsibly. If your score is under 650, or especially under 550, your options shrink — but they don’t disappear completely.

Can You Get a HELOC with Bad Credit?

Yes, but here’s the key thing: you likely won’t get it from a big bank.

Major banks in Ontario have strict lending guidelines. If your credit score is below 680, they’ll typically decline your HELOC application — even if you have a lot of equity in your home.

However, there are alternative lenders and private lenders in Ontario who specialize in helping people with less-than-perfect credit. These lenders look at the whole picture, not just your score. They focus on things like:

The amount of equity in your home

Your income and ability to make payments

Your recent credit history (have you been improving?)

The reason you need the HELOC (debt consolidation, etc.)

So even if your score is in the 500s or low 600s, you may still qualify — especially if you have strong home equity.

How Much Equity Do You Need for a HELOC?

This is one of the biggest factors when applying for a HELOC with bad credit.

In Ontario, lenders will typically allow you to borrow up to 80% of your home’s value, including any existing mortgage. This is called the loan-to-value ratio (LTV). For example:

If your home is worth $600,000

And you owe $300,000 on your mortgage

You might be able to borrow up to $180,000 ($600K × 80% = $480K; $480K − $300K = $180K)

The more equity you have, the more comfortable lenders feel — especially if your credit score is weak. In some cases, lenders may cap your borrowing at 65% or 70% LTV if your credit is very low, to reduce their risk.

What Are the Trade-Offs?

Getting approved for a HELOC with bad credit usually comes with a few trade-offs:

1. Higher Interest Rates

Alternative and private lenders take on more risk by lending to clients with lower credit scores. As a result, the interest rates on their HELOCs are higher — sometimes significantly.

Whereas a bank HELOC might offer prime + 0.5% to prime + 1.0%, a bad credit HELOC could be prime + 4%, 5%, or even higher. But it’s still often cheaper than carrying high-interest credit card balances or payday loans.

2. Closing Costs

Some alternative lenders charge setup fees, legal fees, or appraisal fees upfront. These may be built into the loan or paid out of pocket. It’s important to compare offers and understand the full cost before committing.

3. Shorter Terms or Requalification

Private lenders may offer HELOCs with shorter terms (e.g. 1-3 years), requiring you to renew or requalify after that period. The idea is that you use the time to improve your credit and potentially refinance with a better lender later on.

When Does a Bad Credit HELOC Make Sense?

Even with the trade-offs, a HELOC can be a smart financial move — if it’s used wisely. Here are a few scenarios where it can help:

Debt Consolidation

If you’re paying 19% on credit cards or 10%+ on personal loans, using a HELOC to consolidate that debt can save you hundreds or even thousands in interest. Just make sure you don’t rack up the credit cards again after paying them off.

Emergency Expenses

Medical bills, urgent repairs, or legal costs can hit when you least expect it. A HELOC gives you a low-cost way to access funds quickly — even with bruised credit.

Short-Term Cash Flow Support

If you’re self-employed or in a temporary income dip, a HELOC can help you smooth out cash flow until things stabilize — especially if you’ve got significant equity and a plan to repay.

Applying for a HELOC with a Mortgage Broker

If your credit isn’t great, working with a mortgage broker — especially one that specializes in bad credit HELOCs — can make a huge difference.

At 360Lending, we work with dozens of lenders across Ontario, including banks, alternative lenders, and private lenders. That means we can match you with the ones most likely to approve your application, even if your score is below 600.

We also help you:

Understand how much you can borrow

Compare interest rates and terms

Avoid predatory lenders

Build a plan to improve your credit and refinance later

In most cases, you don’t pay us anything out of pocket — we’re paid by the lender once your HELOC is funded.

How to Apply for a HELOC with Bad Credit

If your credit isn’t perfect, applying for a HELOC on your own can feel overwhelming. The good news? When you work with a mortgage broker — especially one experienced with bad credit situations — they’ll guide you through every step and take care of the most difficult parts for you.

Here’s how the process typically works when you partner with a broker like 360Lending:

1. Share Your Basic Info

Your broker will start by collecting the essentials — things like:

Your home’s estimated value

Your remaining mortgage balance

Your employment status and income source

Your reason for borrowing (e.g. debt consolidation, renovation, emergency funds)

This helps the broker get a clear picture of your situation and recommend the best path forward. You don’t need perfect paperwork at this stage — just a conversation.

2. Broker Checks Your Credit With Your Permission

Once you give consent, your broker will access your credit report. They’ll go over your score with you and explain what lenders will see. Even if your score is low, they can point out positive signs — like recent payments made on time — and identify which lenders are most likely to say yes.

3. Calculate Your Borrowing Power

Using your home value, current mortgage balance, and credit profile, your broker will figure out how much you could borrow — usually up to 80% of your home’s value. They’ll also estimate your potential monthly payment and what interest rate range you might qualify for based on your file.

4. Gather Supporting Documents

To move forward with an application, your broker will request documents like:

Your most recent mortgage statement

A copy of your property tax bill

Proof of income (pay stubs, business financials, etc.)

Valid photo ID

A list of any debts you want to consolidate

They’ll also help you pull together anything else specific lenders might ask for, especially if you're self-employed or your income varies.

5. Shop Your Application to the Right Lenders

Here’s where the broker’s connections really matter. They’ll match your application to lenders who work with clients in your credit range — and who offer fair rates and terms. You won’t have to apply to five different places yourself. Your broker does all the negotiating for you, and often within a day or two.

6. Compare Offers and Finalize the Deal

If your broker receives multiple offers, they’ll walk you through the details of each one — including:

The interest rate (and how it compares to other options)

Any lender or broker fees

How your payments will work (interest-only or blended)

Whether the HELOC is open or has a fixed term

They’ll also help you ask the right questions and avoid lenders with hidden fees or aggressive terms.

7. Sign and Fund

Once you’ve chosen the offer that works best for you, your broker will coordinate everything — including the paperwork, legal review, and scheduling the funding. In some cases, your funds can be available within a few days.

What Lenders Look For (Besides Credit Score)

When your credit score isn’t great, lenders take a broader view of your situation. Some of the key things they’ll focus on:

✅ Home Equity

If you have 40–50% equity or more, that gives lenders confidence. Even if your credit is poor, strong equity shows that there’s room to recover the loan if things go wrong.

✅ Income Stability

You don’t need a high income to qualify for a HELOC, but you do need enough income to cover your interest payments. Lenders may want to verify your job history or self-employment track record.

✅ Payment History (Especially the Past 12 Months)

Some lenders will overlook older credit issues if you’ve had a clean record over the past year. That means no missed payments, no bounced cheques, and no recent collections.

✅ Purpose of Funds

Lenders often want to know why you’re borrowing. Using a HELOC to consolidate high-interest debt, catch up on bills, or make home repairs is usually seen as responsible — especially if you’re building a path toward financial recovery.

Tips to Improve Your Approval Odds

Bad credit doesn’t have to mean “no options” — and there are a few things you can do to boost your chances of qualifying:

✅ Apply with a Co-Borrower

Adding a co-borrower with stronger credit or income can improve your approval odds and help you get better rates. It also reassures lenders that someone else can help repay the loan if needed.

✅ Pay Down Debts Before Applying

If you’re close to your credit limits — especially on credit cards — paying those down even a little can improve your debt-to-income ratio and credit utilization score, both of which matter to lenders.

Why It’s Worth Talking to a Broker Now

If you’re wondering whether now is the right time to apply for a HELOC — especially with bad credit — the best thing you can do is start the conversation.

You don’t have to commit to anything today. But speaking with a mortgage broker can give you clarity. You’ll learn how much equity you can access, what kind of interest rate range to expect, and whether a HELOC, second mortgage, or other option makes the most sense for your situation.

A good broker won’t push you to take a deal you’re not ready for. Instead, they’ll:

Show you what’s possible right now

Explain where you stand with lenders

Help you map out a path to improve your options if needed

Sometimes that means moving ahead right away — especially if you’re dealing with high-interest debt or cash flow challenges. Other times, it means taking a few simple steps to boost your credit or reduce your balances before applying.

Either way, you’ll be in a better position than you were before. And you won’t have to figure it all out alone.

At 360Lending, we specialize in helping Ontario homeowners make the most of their home equity — even with bruised credit. Whether you’re ready now or just want some straight advice, we’re here to help you explore your options and move forward with confidence.

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