Home Equity Line of Credit (HELOC) and Home Equity Loan
The major difference between the two products (also known as second mortgages) are:
- the loan is a one-time lump sum loan, and the line of credit is ‘revolving’ such that any principal you pay back is then available for you to borrow again.
- the loan is typically a fixed rate, while HELOCs are typically variable rate,
- HELOCs more often than home loans, allow for interest-only smaller payments, with a large ‘balloon’ payment at the end.
One benefit of borrowing this way is that the interest paid on any home-secured loan is in most cases tax-deductible*. Credit unions may offer the best rates available. Or contact your preferred institution to see if you qualify.
* Always contact a trusted tax professional to verify eligibility in your specific case.
- $50,000+ available depending on creditworthyness
- Minimum equity in home is needed to qualify
- Competitive interest rates
- Interest paid is typically tax-deductible