Home Equity Line of Credit (HELOC) (HELOC)

A line of credit secured by the equity in a consumer's home. It can be used for home improvements, debt consolidation, and other major purchases. Interest paid on the loan is generally tax deductible (consult a tax advisor to be sure). The funds may be accessed by writing checks against the line of credit or by getting a cash advance.

A line of credit secured by the equity in a member's home. It is typically used for home improvements, debt consolidation, and other major purchases. Interest paid on the loan is generally tax deductible (consult a tax advisor to be sure). The funds may be accessed by writing checks against the line of credit or by getting a cash advance.

Sometimes referred to as a HELOC, a home equity line of credit lets you borrow against the equity you've built in your home, usually by using a debit card or writing checks against your available balance.

Your credit line, or limit, is fixed, but you can draw against it up to that limit rather than receive the entire loan amount as a lump sum. Whatever you borrow reduces your available balance until you repay it. Then you can borrow it again.

Home equity lines of credit have variable interest rates. The terms of repayment vary and are spelled out in your agreement.

In some cases, you begin to repay principal and interest as soon as you borrow. In others, you pay interest only and make a one-time full payment of principal at some set date. Or, you may make interest-only payments for a specific period, and then begin to repay principal as well.

It's important to keep in mind that because your home serves as collateral for the line of credit, your home could be at risk if you default, or fall behind on repayment.

a way of borrowing money against the equity in one’s home to pay for things such as home repairs, college education, or other personal uses.