HELOC (Home Equity Line of Credit)
Definition
A HELOC is a revolving credit line secured against your home that you can draw from, repay, and draw again, with interest charged only on the balance you actually use.
How it works
A standalone HELOC can go up to 65% of your home's value, and a HELOC combined with a mortgage can reach 80% in total. The rate is variable and tied to prime, and the minimum payment is normally interest only.
That flexibility suits ongoing or uncertain costs — a phased renovation, a business need, or an emergency buffer — far better than a lump-sum loan. It is much less suited to spending you cannot repay, because interest-only payments never reduce the balance.
Most HELOCs are registered as a collateral charge, which can make switching lenders later more complicated and sometimes more expensive than a standard charge.
Quick facts
- Up to 65% of value standalone, 80% combined with a mortgage.
- Variable rate tied to prime; interest-only minimum payments.
- Usually registered as a collateral charge.
Put this into practice
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