HELOC stands for Home Equity Line of Credit, a type of loan that allows a homeowner to borrow against the equity in their home as needed.

What Is A HELOC?

A HELOC, or Home Equity Line of Credit, is a type of loan that allows you to borrow money using the equity in your home as collateral. It is similar to a credit card in that you are given a revolving line of credit that you can use as needed.  You only pay interest on the money you borrow and the revolving line remains open for the first 10 years. After the interest-only (draw period) 10 years, the balance will be amortized for a monthly payment to pay off the loan in full over the next 20 years. HELOCs have a variable interest rate, typically based on Prime Rate plus a certain margin. HELOCs are a good option for homeowners who need to borrow a large amount of money for home improvements, debt consolidate, buying a large asset like a car or investment property, stock investments, cover large expenses, or even just have available for a rainy day or emergency. The flexibility to only pay interest on the money actually used can be very appealing.

The Benefits of HELOCs

  • Provides access to credit on an as-needed basis for 10 years
  • Can be used for various purposes, including home improvements and debt consolidation
  • Offers flexible repayment options
  • May have lower interest rates compared to credit cards or personal loans
  • May offer tax benefits for home-related expenses

Who Should Consider a HELOC?

  • Homeowners with available equity in their property
  • Individuals who need access to a flexible line of credit
  • Those who want to borrow money at a lower interest rate than a credit card

Eligibility Guide

  • Have equity in your home
  • Have a good credit score
  • Have a stable income
  • Have a history of timely mortgage payments
  • Provide proof of income and employment
  • Be a homeowner or co-homeowner on the property
  • Property meets certain loan-to-value ratio requirements

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