Home Equity Line of Credit (HELOC)
mortgageAlso known as: HELOC, home equity line of credit
Updated · Written and reviewed by Konstantin Iakovlev
Detailed explanation
HELOCs typically have two phases: Draw Period (5-10 years, interest-only payments common) and Repayment Period (10-20 years, principal + interest). Combined LTV (existing mortgage + HELOC) usually capped at 80-85% of home value. Interest is tax-deductible if used to "buy, build, or substantially improve" the home (TCJA 2017 restriction); not deductible if used for personal expenses. Variable-rate HELOCs reset monthly with Prime Rate; if Prime rises 2%, your HELOC rate rises 2%. Generally cheaper than personal loans/credit cards but riskier (loss of home if you default).
Use these calculators to apply this concept
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