Home Equity Loan vs. HELOC: What’s the Difference?
If you are looking to tap into your home value, a home equity loan and a HELOC are two common options, but they work a little differently.
- A home equity loan gives you a lump sum upfront with a fixed interest rate and predictable monthly payments. It is a good fit for one-time expenses like home improvements or debt consolidation.
- A HELOC (Home Equity Line of Credit) works more like a credit card. You are approved for a set limit and can borrow as needed during a draw period, typically with a variable rate. This option is helpful for ongoing or unexpected expenses.
What can you use it for?
Home equity loans and HELOCs can be used for a variety of expenses, including:
- Home improvements and renovations
- Debt consolidation
- Major purchases
- Education expenses
- Emergency expenses
- Medical bills
Both options use your home as collateral, so it is important to choose what fits your financial goals and comfort level.
Take the next step toward your financial goals with an SVCU HELOC.