The RBC Homeline Plan is an innovative mortgage product offered by the Royal Bank of Canada (RBC), one of the largest banks in Canada. RBC is a leading provider of global personal and commercial banking, wealth management, insurance, investor services, and capital markets products and services.
In this comprehensive review, we will examine the RBC Homeline Plan in detail so that you can decide if it is the right choice for your financial situation.
What is the RBC Homeline Plan?
The RBC Homeline Plan is a mortgage product offered by RBC Royal Bank that allows homeowners to access the equity in their homes. It combines a traditional mortgage with a home equity line of credit (HELOC), providing borrowers with the benefits of both products in one.
With this loan option, your mortgage and HELOC maintain separate balances but are bundled together under the RBC Homeline Plan for easier administration.
As you make mortgage payments and pay down your mortgage principal, the available credit limit on your HELOC portion rises. This gives you flexible access to funds at lower interest rates that you can use for renovations, investments, debt consolidation, and more.
How RBC Homeline Plan Works?
The RBC Homeline Plan combines your RBC mortgage and home equity line of credit while keeping the balances separate. Your mortgage and HELOC amounts are tracked independently but managed together.
As your mortgage principal is paid down and your home equity grows over time, your available credit limit on the HELOC portion also increases.
For example, if you made a $50,000 down payment on a $300,000 home and took out a $250,000 RBC mortgage, you would have $50,000 in initial equity. RBC Homeline Plan would give you a HELOC credit limit of up to 65% of that equity, or $32,500 to start.
As you begin making mortgage payments, your principal balance decreases while your equity increases. This causes your HELOC credit limit to rise simultaneously.
With the RBC Homeline Plan, you can access HELOC funds easily anytime through online or mobile banking, ATMs, cheques, or branches. There is no need to reapply to access additional funds up to your credit limit.
What are the Current RBC Homeline Plan Rates?
The RBC Homeline Plan provides borrowers with various fixed and variable mortgage rates and terms.
Variable Rate
As of Januaray 2025, the HELOC interest rate is RBC Prime Rate minus 0.5%. This variable rate is lower than alternative products like personal lines of credit and traditional HELOCs.
Fixed Rate
RBC also offers fixed rate options for the HELOC portion, which provides stability and consistent payments. Compare the variable and fixed rates to other lending options to find your situation’s most affordable interest cost.
| Term | Rate | APR |
|---|---|---|
| 4-year fixed closed term | 4.840% | 4.870% APR |
| 5-year fixed closed term | 4.890% | 4.920% APR |
| 5-year variable closed term | RBC Prime Rate – 0.500% | 5.480% APR |
Today’s Royal Bank of Canada prime rate
RBC Prime Rate: 5.450%
What are the key Features of the RBC Homeline Plan?
The RBC Homeline Plan offers 5 useful features and benefits:
Low Interest Rate
The RBC Homeline Plan comes with a lower variable interest rate than traditional lines of credit and allows affordable borrowing.
Flexible Repayment Options
With the RBC Homeline Plan, you have flexible options to repay your HELOC balance:
- Make interest-only payments
- Pay a portion of your balance as a lump sum
- Pay off the entire outstanding HELOC balance at any time with no penalties
This flexibility makes it easy to manage your cash flow. You can lower payments when money is tight or pay more when possible to save on interest.
Increasing Credit Limit
A key benefit of the RBC Homeline Plan is that your available HELOC credit limit rises as your mortgage principal is paid down and your home equity increases.
For example, if your home value increased from $300,000 to $330,000 over 5 years, your equity would rise from $50,000 to $80,000 if your mortgage balance decreased to $250,000. This would grow your HELOC credit limit from $32,500 to $52,000.
Easy Access to Funds
The RBC Homeline Plan allows you to easily access approved HELOC funds anytime through:
- RBC Online Banking
- RBC Mobile App
- RBC ATMs
- In-person at RBC branches
- Writing RBC Homeline Plan cheques
You don’t need to reapply or visit a branch to access additional funds up to your credit limit.
Potential Tax Deduction Benefits
The interest paid on the HELOC portion may qualify for a tax deduction on money borrowed for investment purposes. For example, if you use the funds to invest in a rental property or stocks. Consult a tax professional to understand how this may benefit you.
What can you use the RBC Homeline Plan For?
The RBC Homeline Plan is a good option for borrowers who want to strategically leverage the equity in their home for major expenses, purchases or investments.
Common uses of RBC Homeline Plan funds include:
- Home renovations: Fund home improvements, renovations, or repairs to increase property value.
- Education: Pay for your continuing education or your children’s private school or post-secondary education.
- Debt consolidation: Consolidate higher-interest debts like credit cards and personal loans into your lower-rate HELOC.
- Major purchases: Finance large expenses like a new car, boat, recreational property, or additional real estate investments.
- Emergency funds: Have funds readily available for emergency costs.
To qualify, you need at least 20% equity in your home. The maximum you can borrow is 65% of your home’s appraised value at the time of application.
This product is best suited for homeowners with sufficient equity available and who want the flexibility to access extra funds for large purchases, investments, or other financial needs.
What are the Cons of the RBC Homeline Plan?
While the RBC Homeline Plan has many benefits, there are also 4 potential disadvantages to consider:
Your Home is Used as Collateral
Since the RBC Homeline Plan utilizes your home equity, your house or property is used as collateral for the loan. Defaulting on payments could put you at risk of foreclosure.
Limited to a Maximum of 65% Loan-to-Value
The RBC Homeline Plan caps your borrowing limit at 65% of your home’s appraised value. This means you may be unable to access as much of your equity as you want.
Closing Fees and Setup Costs
When setting up an RBC Homeline Plan, you will likely need to pay some closing costs and fees for legal services, appraisals, and loan processing. Typical fees range from $1,000 to $1,500.
RBC Homeline Plan vs Alternatives
How does the RBC Homeline Plan compare to other top banks’ HELOC products?
| Product | Interest Rate | Maximum LTV | Credit Limit | Online Account Access? |
|---|---|---|---|---|
| RBC Homeline Plan | Prime – 0.50% | Up to 65% | Increases over time | Yes |
| TD Home Equity FlexLine | Prime – 0.50% | Up to 80% | Fixed | Yes |
| Scotia Total Equity Plan | Prime – 0.50% | Up to 65% | Increases over time | Yes |
| CIBC Home Power Plan | Prime + 0.50% | Up to 65% | Increases over time | Yes |
| BMO Homeowner ReadiLine | Prime – 0.50% | Up to 80% | Fixed | Yes |
| National Bank Homeline | Prime – 0.25% | Up to 80% | Fixed | Yes |
Interest Rates
The RBC Homeline Plan offers one of the lowest interest rates among the major banks at Prime – 0.50%, making it one of the most affordable options.
Maximum LTV
The maximum loan-to-value (LTV) ratio offered ranges from 65% to 80% across banks. RBC caps borrowing at 65% LTV, which is lower and limits how much equity you can access.
Credit Limit
RBC allows your credit limit to grow over time as you build equity, whereas some alternatives, like TD and BMO, have a fixed limit.
Online Access
All provide digital account access to manage your HELOC easily online.
While products are similar, the RBC Homeline Plan stands out with its competitive rate, rising credit limit, and strong online account management features. However, the 65% LTV maximum may be restrictive for some borrowers.
Who Should Consider the RBC Homeline Plan?
The RBC Homeline Plan is a good option for homeowners who:
- Have at least 20% equity available in their home
- Want to access extra funds for major expenses, purchases or investments
- Seek the lowest possible interest rate and flexible repayment terms
- Value convenience through online banking and account management
This product is less suitable for those who:
- Require borrowing more than 65% of their home’s value
- Prefer a fixed interest rate instead of a variable rate HELOC
- Want to access the same set credit limit over the loan term
Before choosing this product, it is recommended that you carefully consider your specific financial situation, credit profile, home equity position, planned use of funds, and risk tolerance.
The Bottom Line
The RBC Homeline Plan provides an affordable and flexible way for mortgage holders to strategically leverage the available equity in their homes when needed.
By bundling a mortgage and HELOC, borrowers get the best of both products in a single loan with competitive rates and tax deduction benefits.
While not the optimal choice for all scenarios, the RBC Homeline Plan is a top choice for Canadians seeking to use their home equity through a consolidated lending approach with competitive features.
However, it is recommended that you carefully examine your financial situation and consult with a mortgage professional before determining if this strategic lending option suits your needs. Contact Best Mortgage Online today for dedicated guidance.
FAQs
How do I access the funds from my RBC Homeline Plan?
You can access funds anytime online, on mobile, at ATMs, cheques, or in-branch. No need to reapply.
Can I get a fixed rate with the RBC Homeline Plan?
Yes, 4-year and 5-year fixed rate terms are available.
Is the RBC Homeline Plan risky?
Like any HELOC, it uses your home as collateral, so you risk foreclosure if you default.
Can I use the RBC Homeline Plan for my down payment?
No, it cannot be used directly as a down payment on a home purchase, as it is a form of refinancing.
How long does approval take for the RBC Homeline Plan?
Pre-approval can take 1-3 days. Final approval can take 30-60 days, including appraisal.
When should I consider the RBC Homeline Plan?
When you have sufficient home equity and need funds for large expenses, investments or debt consolidation
What are the maximum borrowing limits of RBC Homeline Plan?
You can borrow up to 65% of your home's value and up to 80% of the total with your mortgage.