HELOC (Home Equity Line of Credit)
A revolving credit line secured by your home's equity, with variable rate and a typical 10-year draw period.
A HELOC works like a credit card backed by your house: a lender approves a credit limit (usually up to 80–85% of home value minus your current mortgage balance), you draw on it as needed during the 'draw period' (typically 10 years, interest-only payments), then enter the 'repayment period' (10–20 years, principal + interest). Rates are usually variable, tied to the Prime rate. Useful for staged renovations, emergency liquidity, or short-term bridge financing — risky for everyday spending because your home is collateral. If you can't pay, the lender can foreclose.
Related
- Home equity — The portion of your home's value that you actually own — current market value minus what you still owe.
- LTV (Loan-to-Value) — Loan amount divided by home value, expressed as a percentage.