🏡 HELOC vs Refinance: Smart Ways to Tap Equity This Fall

Introduction

With Canadian homeowners sitting on record levels of home equity, many are wondering how to best access it — especially as rates begin to stabilize heading into Fall 2025. Two popular options stand out: the Home Equity Line of Credit (HELOC) and Mortgage Refinancing. Both let you use your home’s value to meet financial goals, but they work very differently.

Here’s how to decide which is right for you this season.

1. What Is a HELOC?

A HELOC (Home Equity Line of Credit) lets you borrow against your home equity as needed — similar to a credit card, but with much lower interest rates.

Key benefits:

• Flexible access: Borrow only what you need, when you need it.

• Interest-only payments: Keep monthly costs lower.

• Revolving credit: Repay and reuse funds anytime.

Best for: Homeowners needing ongoing access to funds — for renovations, tuition, or emergency expenses.

2. What Is a Mortgage Refinance?

Refinancing replaces your current mortgage with a new one — possibly with a better rate, different term, or higher balance to access cash.

Key benefits:

• Lower overall rate: Especially if your current mortgage is at a higher interest rate.

• Consolidate debt: Combine multiple payments into one.

• Lump-sum equity access: Ideal for large expenses or investments.

Best for: Homeowners planning to access a large amount of money at once, such as for property investments or paying off high-interest debt.

4. When a HELOC Makes More Sense

• You’re comfortable with variable rates.

• You need occasional access to funds rather than a lump sum.

• You plan short-term renovations or small home improvements.

• You want to keep your existing mortgage intact.

Example: You’re upgrading your kitchen over several months and need access to funds in stages — a HELOC provides flexibility without full refinancing.

5. When Refinancing Is the Better Move

• You want to lock in a lower rate before future changes.

• You have multiple debts (credit cards, car loans) and want to consolidate.

• You need $50,000+ in equity for major investments.

• You’re near your mortgage renewal date and can save on fees.

Example: Refinancing before year-end could lower your monthly costs and simplify your finances before rate cuts in early 2026.

6. RateShop Tip: Combine Both

Some homeowners use both a refinance and HELOC — refinance to secure a lower rate on their main mortgage, and open a smaller HELOC for flexibility.
This hybrid approach offers both stability and access.

Conclusion

Your home equity is a powerful tool — but choosing between a HELOC and a refinance depends on your goals, timing, and comfort with rate changes.
Before making a move, compare lenders and calculate total costs with a trusted mortgage broker like RateShop.ca to find the best path forward.