Home Equity Line of Credit (HELOC)

A Home Equity Line of Credit (HELOC) is a flexible financing option that lets you borrow against the equity you’ve built in your home giving you access to funds when you need them, for whatever you need.

Unlike a traditional loan, a HELOC works like a revolving line of credit, meaning you can withdraw, repay, and borrow again similar to how a credit card works, but typically with much lower interest rates.

How a HELOC Works

Your home’s equity (the difference between its market value and your remaining mortgage balance) serves as collateral for the line of credit.

You’re approved for a maximum credit limit, and you can draw funds as needed during what’s called the “draw period” (often 5–10 years). After that, you’ll enter the repayment period, when you can no longer borrow and begin repaying the balance in full.

Common uses for a HELOC include:

  • Home improvements or renovations

  • Debt consolidation

  • College tuition or education expenses

  • Emergency funds or medical bills

  • Large purchases or investments

Benefits of a HELOC

Flexible Access to Funds

Borrow only what you need, when you need it, and pay interest only on the amount you use.

Lower Interest Rates

HELOCs usually have lower rates than credit cards or personal loans, helping you save on borrowing costs.

Revolving Credit Line

As you repay what you’ve borrowed, those funds become available again giving you ongoing access to your equity.

Potential Tax Advantages

In many cases, interest may be tax-deductible when used for home improvements (consult your tax advisor).

Use for Any Purpose

Flexibility to use funds for repairs, debt consolidation, tuition, or personal goals you decide.

Things to Consider

  • Variable Interest Rates: Most HELOCs have adjustable rates, meaning payments can change over time.

  • Risk of Foreclosure: Because your home secures the line of credit, missed payments could put your property at risk.

  • Equity Requirements: You’ll typically need at least 15%–20% equity in your home to qualify.

  • Draw and Repayment Periods: The draw period usually lasts 5–10 years, followed by a 10–20-year repayment term.

Is a HELOC Right for You?

A HELOC might be the perfect solution if you:

  • Have built up equity in your home

  • Want flexible, ongoing access to funds

  • Prefer to borrow only what you need rather than take a lump sum

  • Have plans for home improvements or major expenses