A HELOC, or Home Equity Line of Credit, is a type of flexible secured loan that allows you to borrow money against the equity you have built up in your home.
They are most commonly available in the USA and Canada, but some UK lenders have started using the HELOC name for their products.
It’s a revolving line of credit, meaning you can borrow money as you need it, up to a certain limit, and pay it back over time.
HELOCs are secured loans, which means your home serves as collateral for the loan, and also puts it at risk. The amount you can borrow with a HELOC depends on the equity you have in your home, which is the difference between the current value of your home and the amount you still owe on your mortgage.
HELOCs typically have variable interest rates, which means that the interest rate can fluctuate over time, based on changes to the base rate. This can make it difficult to predict what your monthly payments will be, but it also means that if interest rates go down, your payments may go down as well.
One of the benefits of a HELOC is that you can use the funds for a variety of purposes, such as home improvements, paying off high-interest debt, or covering unexpected expenses.
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