Home Equity Line of Credit

Can your home's value be turned into cash that you can access when you need it? It can if you qualify for a Home Equity Line of Credit (HELOC).

A HELOC is a type of home loan – usually with an adjustable rate – that gives the homeowner access to a line of credit determined by the lender from the value of the home. 

A HELOC loan lets you borrow against your home's equity – the value of the home minus the amount owed on the primary mortgage.

Think of a HELOC like a credit card in the sense that you have a line of credit that you can access for your expenditures. You will have to pay back what you owe with interest, but you can come back and withdraw as much as you need with separate transactions. It is ultimately up to you how much you want to withdraw from your line of credit.

HELOC Draw and Repayment Periods

A HELOC has a draw period and a repayment period. The draw period can vary but is often between 5-10 years. During the draw period, you can borrow from the credit line and minimum payments are often interest only, but you can also make payments on the principal loan balance as well.

During the repayment period (which also can vary, but is often 10-20 years), you can no longer borrow against the credit line. Instead, it's time to pay back what you owe back with monthly payments consisting of the principal and the interest of the loan.