What if your biggest retirement asset was the roof over your head? On the face of it, it might look like a no-brainer: Taking advantage of soaring home values and low interest rates to provide some working cash in order to travel, to beef up sagging retirement portfolios or to make new investments in real estate or the stock market.

There are a number of ways to tap into your home’s equity, including reverse mortgages, home equity lines of credit or straightforward mortgages. They can all look attractive, depending on your stage of life and what you want the money for, but all have risks for the older homeowner.

A reverse mortgage, which does not need to be repaid until the homeowner dies or wants to sell, comes with age restrictions and a cap on the amount of money that can be accessed.

It also comes with a higher rate of interest — currently, the rate on a five-year fixed rate mortgage is 2.99%, while on a Canadian Home Income Plan reverse mortgage, the rate is 5.5 %.

A home equity line of credit, or HELOC, allows the homeowner access to some of the appraised value of a home, but only requires the borrower to make payments on the interest. The full amount only comes due, again, when the homeowner dies or the house is sold.

The Office of the Superintendent of Financial Institutions (OSFI) has warned against these products this summer, asking banks to reduce the loan-to-value ratio from 80% to 65%.

“HELOCs are inherently riskier products, given their revolving nature, persistence of debt balances and their ineligibility for mortgage insurance,” OSFI warned.

Taking out a mortgage has a couple of advantages over both of these options, according to Chris Kiskunas, a sales manager at Royal Bank of Canada. For one thing, while mortgages can be had at fixed rates, the interest rate on a HELOC is usually variable — not a bad thing in the current environment, where rates are at record lows.

“But if the variable rate starts to move up, which historically it has and of course it will, then your costs start to escalate,” Ms. Kiskunas says.

“And what if? What if interest rates go to 10% or 12%? Your ability to repay it is going to be significantly hampered.”

Another disadvantage to the HELOC is that the home is permanently encumbered.

“You’re depleting an asset when you mortgage that house but you’re rebuilding your equity in it when you pay down that mortgage.

“A line of credit would be less expensive to carry because all you’re paying on it is your interest, but unless you’re disciplined enough to make payments against the principle, it will just sit there in perpetuity until you pass away and the home is sold,” she says.

All three options have risks to balance out their benefits — the extra income they provide is subject to taxes and might also trigger clawbacks to government pension benefits.

If you have enough money to service the mortgage payments, Ms. Kiskunas is in favour of tapping the equity in your home to help fund your retirement years.

“If I’m going to put a $100,000 mortgage on my house and I’m going to spend my time travelling while I still can, before I’m chair-bound or whatever’s going to happen to me. I can understand that.

“And that’s not a bad strategy if you want to take equity out of your home and enjoy the first years of your retirement doing the things you love to do.”

What she wouldn’t advise, however, is using that money to pad your investment portfolio.

On the other hand, Adrian Mastracci, a portfolio manager with KCM Wealth Management Inc., in Vancouver, gives a more qualified nod to borrowing to invest.

“Leverage can be a good thing right up until it isn’t,” Mr. Mastracci warns, pointing to volatility in the equity markets, and noting that low interest rates are a boon to the borrower and a bane to the investor.

Still, as long as you know how you’ll make ends meet if your investments fail, “as a portfolio manager, I would tell you that this is a reasonable thing to do,” he says.

“If you can say to yourself, ‘I’ve got enough cash flow, I’ve got enough assets, I’m OK, worst that happens is I’ve got to pull out [the full value of the mortgage] from somewhere else and pay it off,’ if that’s what you say to yourself, then that’s OK.”

Mortgage broker Michael Maguire says he used to see a lot more people taking out loans against their home equity with the intention of investing the money, but volatile markets have made it less common.

Mr. Maguire, with Mortgage Wise Financial in London, Ont., suggests “getting your feet wet” with smaller loan amounts — enough to build a comfort level with the idea of investing, but not so much that you can’t recover if you lose it.

“The biggest problem I’ve seen over the years is people do it for larger amounts of money and when things don’t go perfectly that’s when they freak out and they end up selling things that they probably shouldn’t be selling.”

Farhaneh Haque, director, mortgage advice, for TD Canada Trust, is a big proponent of a mortgage-less retirement.

“There’s nothing better than being mortgage-free in retirement,” she says, and even for those who are sitting on a hefty pile of equity, the risks outweigh the benefits.

She says it’s generally accepted that Canadians need 70% of their pre-retirement income to live on — and that’s assuming that they don’t have to make mortgage payments.

“Your home is your financial base. Remortgaging it at retirement could put your entire estate plan at risk.”