Looking for a HELOC to Consolidate Debt in Ontario?

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We help homeowners get the lowest rates for home equity loans, home equity lines of credit, refinancing, and other mortgage products.

👉 Click here to talk to us about getting a HELOC.

If you’re juggling credit card balances, personal loans, or other high-interest debt, you’re not alone. Many homeowners across Ontario are dealing with the same thing—and finding it tough to get ahead. One powerful solution? Using a HELOC (Home Equity Line of Credit) to consolidate your debt.

Let's walk you through exactly how a HELOC works, why it can be a smart move for debt consolidation, and how to qualify—even if you have bad credit or no income.

What Is a HELOC and How Does It Work?

A Home Equity Line of Credit (HELOC) is a flexible loan that lets you borrow money using your home as collateral. You can think of it like a credit card—except instead of being unsecured, it’s backed by your home equity.

Equity is the portion of your home you actually own (i.e., the difference between your home’s value and what you still owe on your mortgage). A HELOC lets you borrow a percentage of that equity—usually up to 65% to 80% of your home’s value, depending on the lender.

You only pay interest on what you use, not the full amount approved. And the interest rates are much lower than most credit cards or unsecured loans.

Is It a Good Idea to Consolidate Debt with a HELOC?

In many cases, yes. A HELOC can be a smart way to take control of your debt. Here’s why:

1. Lower Your Interest Rate—By a Lot

Most credit cards charge 20% interest or more. A HELOC? Currently (April 2025), rates for HELOCs in 2nd position behind an existing 1st mortgage start at 7.49%, depending on your credit and available equity.

That means you could cut your interest costs in half—or more. This frees up your monthly cash flow and helps you pay off your debt faster.

2. Lower Your Interest Payment—By a Lot

Most credit cards ask you to pay around 2% to 2.5% of your balance each month. So, if you owe $50,000, your minimum monthly payment could be about $1,250—and that’s mostly going toward interest, not the actual debt.

Now compare that to a HELOC, which currently (as of April 2025) starts at 7.49% for second-position loans, depending on your credit and home equity. Even if your rate is closer to 11.99%, your monthly interest payment on that same $50,000 would be around $500.

That’s a savings of over $700 per month—money that can go toward actually paying down your debt or giving you breathing room in your budget.

3. Improve Your Credit Score

When you pay off your credit card balances using a HELOC, your credit utilization drops. That’s one of the biggest factors in your credit score. Most homeowners who use a HELOC to pay off high-interest debt see a credit boost within 60 to 90 days.

Just be sure to use the HELOC responsibly—don’t rack up more credit card debt after consolidating.

4. Access to Cheaper Credit in the Long Run

Because HELOCs come with revolving access, you can use the line again in the future without reapplying. If you’ve been relying on credit cards to cover shortfalls, a HELOC is a cheaper and more manageable option long-term.

It’s not just about paying off debt—it’s about building a better financial foundation for the future.

Can You Get a HELOC with Bad Credit in Ontario?

Yes—you absolutely can. Even if your credit isn’t perfect, there are still options available. The best first step is to talk to a mortgage broker. They can review your credit and equity situation, and match you with the lender that fits best.

There are three main types of HELOC lenders in Ontario:

1. Prime Lenders (Big Banks)

These are the major banks and credit unions. They offer the lowest interest rates, but also have the strictest approval requirements. You’ll typically need:

A credit score of 680 or higher

Strong income

A clean repayment history

2. B Lenders (Alternative Lenders)

These are lenders that cater to borrowers with slightly lower credit scores or more complicated finances. You can often qualify with a credit score of 550+, as long as you have decent equity and manageable debt levels.

Rates are slightly higher than the banks—but still much lower than credit cards.

3. Private Lenders

Private HELOCs are based mostly on your home equity, not your credit. There are no credit score requirements. These are a good fit if:

You can benefit from the cash flow savings

You’ve had recent financial struggles

Your credit score is not strong

Private lenders charge higher interest, but they can offer an effective solution when banks say no.

Can You Get a HELOC with No Job or No Income?

Yes—you still have options, even if you don’t have traditional income right now. Again—this is where a mortgage broker comes in. They can walk you through what’s possible based on your income, credit, and equity, and help you apply to the right lender.

Again, it depends on which lender category you’re working with:

1. HELOCs From Prime Lenders (Banks)

Banks want to see a solid debt-to-income ratio. Most will only approve your HELOC if your GDS (gross debt service) is below 39%, and TDS (total debt service) is below 44%.

That means if you’re not working, or your income is low, you might not qualify with a bank.

2. HELOCs From B Lenders

These lenders are a bit more flexible. They’ll often allow higher debt ratios—up to 50%. That means if you have rental income, self-employment income, or even spousal support, you might still qualify.

3. HELOCs From Private Lenders

Private lenders don’t usually look at income at all. As long as you have enough equity in your home, they’re mainly focused on the value of the property and how much you want to borrow.

If you're in between jobs, recently retired, or self-employed without full documentation, a private HELOC may be your best bet.

How to Apply for a HELOC in Ontario

The most important step is to work with a reputable mortgage broker; applying for a HELOC becomes a guided, stress-free process. Here’s how your broker helps from start to finish:

1. Assess Your Goals and Finances

It starts with a quick chat about why you need a HELOC—usually to consolidate debt or free up cash flow. From there, your broker will review your home equity, credit score, income, and overall financial picture to see what options are available.

2. Assess Product Suitability

Based on your profile, your broker will compare HELOC options from a wide range of lenders—banks, alternative lenders, and private lenders. They’ll focus on finding the best rate, terms, and flexibility for your situation.

3. Handle the Application and Paperwork

Your broker will walk you through the documents needed (like mortgage statements, income proof, and property tax bills), package your application, and submit it to the lender. They’ll handle all back-and-forth to keep things moving.

4. Finalize and Fund the HELOC

Once approved, your broker will coordinate with the lender and any legal partners to close the deal. You’ll get clear instructions on how to access your funds and use your HELOC effectively—without surprises.

Documents Need to Apply for a HELOC in Ontario

To apply for a HELOC in Ontario, you’ll need to provide some basic documentation.

Here’s what you should prepare:

Recent mortgage statement – Shows your current mortgage balance and lender

Property tax bill – Confirms your property is up to date with taxes

Proof of income – If you're working, this includes pay stubs, T4s, or employment letters

Photo ID – Valid government-issued ID like a driver’s license or passport

Home insurance info – Lenders want to know the property is protected

If you’re self-employed or retired, you may need to show bank statements or pension documents instead.

The more organized you are, the faster the process will go.

Get a HELOC For Debt Consolidation in Ontario

Using a HELOC to consolidate debt can be a smart, strategic move—especially if you’re feeling stuck with high-interest credit cards or personal loans. With lower rates, flexible repayment, and the potential to improve your credit, it’s one of the best tools Ontario homeowners have.

Whether your credit is excellent or needs some work... whether you're working full-time or between jobs... the key is to know your options and work with the right expert.

At 360Lending, we’ve helped thousands of Ontarians use their home equity to eliminate debt, lower stress, and get ahead financially.

Ready to take the next step?

Book a free consultation with one of our mortgage advisors today.

Let’s see what’s possible—for your home, your budget, and your peace of mind.