Both HELOCs and refinancing let you access home equity, but they work very differently. Choosing the right one depends on how you plan to use the money and your overall financial strategy. Here's how to decide. Quick Comparison Refinance Access Revolving credit line Lump sum Payment Interest-only available Principal + interest Rate Usually variable Fixed or variable Flexibility Borrow and repay as needed One-time access Costs Lower upfront Higher (legal, appraisal) How a HELOC Works A Home Equity Line of Credit is revolving credit secured by your home: Borrow up to a set limit (typically 65% of home value) Pay interest only on what you use Repay and re-borrow as needed Usually variable rate Best for: Ongoing expenses (renovations over time, education) Emergency funds Uncertain amounts needed Those who want flexibility How Refinancing Works Refinancing replaces your mortgage with a new one: Access up to 80% of home value Receive lump sum at closing Fixed monthly payments (principal + interest) Fixed or variable rate options Best for: Large, one-time needs Debt consolidation Locking in a rate Predictable payment preferences Explore Both Options Not sure which is right for you? Get personalized advice based on your specific situation and goals. Cost Comparison HELOC Setup Costs Typically minimal or $0 Some annual fees ($25-100) May require home appraisal Refinancing Costs Legal fees: $1,000-2,000 Appraisal: $300-500 Discharge fee: $200-350 Possible penalty if breaking early The Hybrid Option: Readvanceable Mortgage Some products combine mortgage and HELOC: As you pay down your mortgage, HELOC limit increases Access more equity over time without refinancing One product, two functions Ask your broker about readvanceable mortgage options. Tax Considerations Interest deductibility: Investment purposes: Interest may be tax-deductible Personal use: Generally not deductible Consult a tax professional for your specific situation Using borrowed funds for investments (like rental properties) can make the interest tax-deductible. What's Next Discuss your options with our team. We'll help you determine whether a HELOC, refinance, or combination makes most sense for your goals. Ready to Get Started? Contact us today for personalized mortgage advice and competitive rates. Get Pre-Approved Call (416) 822-7357 Frequently Asked Questions Q: Can I have both a HELOC and mortgage? A: Yes. Many homeowners have their primary mortgage plus a HELOC. Combined, they typically can't exceed 80% of your home's value. Q: Which has lower interest rates? A: HELOCs often have higher rates than refinanced mortgages, but you only pay on what you use. Q: Can I convert my HELOC to a mortgage? A: Yes. You can "segment" HELOC balances into fixed-rate portions at most lenders. Q: What if I only need money occasionally? A: HELOC is better—you only pay interest when you actually borrow.
