Recently, my mortgage came up for renewal and in my shopping to find the best rate and term possible, I noticed a common pattern or trend: banks are now promoting HELOC as a one stop solution for all your borrowing needs – including mortgages – rather than giving you a traditional mortgage that is only designed to pay for your home purchase.
Traditional mortgages are still a core product
Banks still offer regular fixed-rate and variable-rate mortgages that amortize over time – in fact, home loans remain a big part of most banks’ credit portfolios. They are not walking away from mortgages in general. Demand for mortgages depends on interest rates, housing markets, and how comfortable borrowers are refinancing or taking new debt.
HELOCs and readvanceable mortgages are being pushed as additional options
In Canada, a big trend over the last decade has been the growth of readvanceable mortgages — these combine a regular mortgage with a HELOC in one package. The credit line re-advances as you pay down your mortgage principal, so you have ongoing borrowing capacity without needing a separate loan each time. Banks promote these because they’re flexible for customers and profitable as long-term products. In other words, it is perceived to be a win-win for both the customer and the bank.
Standalone HELOCs haven’t replaced mortgages
In recent years, the HELOC landscape has shifted as the number of standalone home equity lines has declined in favor of combined mortgage products. This trend is driven partly by major banks pulling back on their offerings or tightening lending standards due to increased regulatory pressure and risk concerns. Consequently, traditional banks are losing market share to non-bank lenders and fintech firms, which have stepped in to play an increasingly vital role in providing these credit solutions.
HELOC flexibility vs. mortgage discipline
One of the biggest advantages of a HELOC is flexibility : you can borrow, repay, and borrow again without re-applying, which makes it attractive for renovations, emergencies, or uneven cash-flow needs. But that same flexibility can have a downside to it. Unlike a traditional mortgage with a fixed amortization schedule, a HELOC doesn’t force principal repayment, which can make debt linger for years if you’re not disciplined. Mortgages, while less flexible, offer predictability: fixed payments, a clear payoff timeline, and insulation from sudden rate swings if you choose a fixed rate. In contrast, HELOCs are almost always variable-rate, meaning rising rates can quickly increase carrying costs and strain household budgets — especially in volatile rate environments.
After much research and contemplation, I went with a HELOC product, taking advantage of a better rate and term than what I was getting from my current lender. I took some extra money for renovations, while making sure the monthly payment will not be much more than what I am currently paying.