Home price hit yet another historical high in November. Average home price increased by over 20% in GTA. One has to wonder if it will continue. We all have heard in media that Canadian housing market is under supplied. However the same has been said about The US housing market for a long time and yet it had barely moved since 2007 until this year. Bank of Canada will very likely increase interest rate next year also.

What do you do if you are sitting on a large sum of equity in your home? If you sell, you need to buy another one and get into a bidding war, which is not ideal. If you do nothing and the market corrects, your net worth goes down. How about accessing the equity without selling? Home equity line of credit (HELOC) or refinancing will allow you to do that.

HELOC and refinancing are quite different. HELOC will have an higher interst rate but it is more flexible. You don't pay interest until you tap it and you only pay interest on fund that you withdraw. However, banks can revise the terms or even call the loan easily. Fund from both products can be used for a variety of purposes, including investment and downpayment for another home purchase either by you or your children. If you use it for investment, the interest will be tax deductible also. While saving accounts pay little to no interest, there are many better investments than holding cash. Your unused equity is essentially unused cash in a sense.

Consult a mortgage professional or financial advisor for more information first before applying for any of these products.