Fund college or university without draining your savings.
Tuition, housing and fees add up quickly. Some families use their home equity to cover them. Here is how it compares with other options, and what to consider.
You've started an application.
Saves as you go · No credit check · A licensed mortgage professional follows up
1Families sometimes use a HELOC, a refinance or a second mortgage to pay tuition for themselves or for a child.
2Government student loans can have lower or no interest and flexible repayment, so compare them first.
3Home equity borrowing is usually cheaper than credit cards or private student loans, but it puts your home behind the debt.
4A HELOC lets you draw for each semester, so you only borrow as the costs come due.
Get ready
What lenders will ask you for
Tuition and fee statements or an estimate for the program
Mortgage statement, property tax bill and home insurance
Proof of income: pay stubs and T4s, or Notices of Assessment
Photo ID
For a co-borrower or guarantor, the same documents for them
Your options
Which kind of lender fits you
Option 1
HELOC
Draw each semester and pay interest only on what you use. Flexible for multi-year programs.
Option 2
Refinance with cash out
A lump sum for the full cost, with one mortgage payment. Check the penalty first.
Option 3
Government student loans and RESP
Compare these first. They may cost less and carry fewer risks.
Option 4
Parent as co-borrower or guarantor
Lets a family member with equity and income support the borrowing.
Avoid these
Common mistakes
!Borrowing the full amount upfront when a semester-by-semester draw would cost less.
!Skipping government loans and grants you may qualify for.
!Not planning how the borrowed money will be repaid after graduation.
!Forgetting that home equity debt must be repaid even if the program changes.
Take action
Your first steps
1Get the total cost of the program, year by year.
2Check government student aid and any RESP funds.
3Estimate your home value and mortgage balance.
4Gather income documents for everyone who will be on the borrowing.
5Start the intake so a broker can compare a HELOC and a refinance for your timeline.
The intake
What your application will ask
Your online application goes one topic at a time and saves every answer and document as you go, so you can stop and come back. It never runs a credit check, and a licensed mortgage professional reviews it and follows up.
For education & tuition borrowers
Who is the education for, and what is the program and total cost?
Over what period will you need the funds?
Do you have an RESP or student loan in place?
What is your estimated home value and current mortgage balance?
What is your approximate household income and how is it earned?
What monthly debt payments do you have today?
Who will repay the borrowed money?
Plus the basics everyone answers 13
Your full name, email, mobile number and the best time to call.
The city you live in, and whether you are a Canadian citizen, permanent resident, or other status.
Are you applying alone or with someone else? If with someone, their name and how you are related.
Your goal: buy, refinance, renew, take out equity, or consolidate debt?
The property type (house, condo, multi-unit) and the city it is in.
Will you live in it, rent it out, or both?
The purchase price or estimated value, and your target closing or renewal date.
Your down payment or available equity, and where it comes from (savings, RRSP/FHSA, a gift, sale of another property).
Your approximate yearly household income before tax.
Your monthly debt payments: car loans, credit cards, lines of credit, student loans, support payments.
Your own estimate of your credit score: excellent, good, fair, poor, or not sure.
In the last 7 years, any bankruptcy, consumer proposal, collections, or missed mortgage payments?
May the broker contact you? (A credit check is only ever run later, with your separate written consent.)
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Answers
Questions people ask
Can I use my home equity to pay tuition?
Yes. Lenders generally do not restrict how you use the money from a HELOC, refinance or second mortgage.
Is a HELOC better than a student loan?
Not always. Government student loans may have lower interest and flexible repayment. A HELOC can be useful for what loans and savings do not cover.
Can I borrow for my child tuition?
Yes, if you own the home. Many parents use a HELOC and draw each term.
What if I cannot repay it after graduation?
The loan is secured by the home, so plan repayment before you borrow. Tell your broker your repayment plan so the right structure is chosen.
Is a HELOC or refinance better for education costs?
A HELOC fits costs spread over several years. A refinance suits a lump sum. Your current mortgage and penalty decide.
Does starting the intake affect my credit?
No. The intake is just questions. A credit check is only done later, with your separate permission.
General information, not mortgage, legal or tax advice. Lender rules change and every application is reviewed on its own facts. Your application and documents are stored privately and go only to a licensed mortgage professional at Top Mortgages Inc; they are never sold, and no credit check is run without your separate written consent.