10 Benefits of a Home Equity Line of Credit

A home equity line of credit is a resource that allows you to use your house as collateral to secure funds to settle large expenses. A HELOC allows you to borrow as much as you need throughout the 10-year draw period. Homeowners can borrow up to 85% of the property value. HELOC lenders use employment history, monthly income, debts, and credit score history. A home equity line of credit functions as a second mortgage that allows homeowners to tap into property equity and use it as cash. Here is a list of 10 HELOC benefits that everyone should know.

  1. Debt Consolidation

A home equity line of credit can help access the capital needed to settle other debts. The lower interest rates of these loans make them a more sensible alternative to other lines of credit. HELOC loans also have more favorable terms compared to other debt vehicles.

2. Cover Emergency Expenses

A home equity line of credit is an excellent way to access capital for emergency expenses. Most lenders disburse large sums in a short period. This is especially critical if you need the money urgently. This is one of the top HELOC benefits for homeowners.

3. Finance Home Improvements

A HELOC loan is the easiest way to finance home improvement. Note that it is tax deductible if the money is used to refurbish or repair your house. Home improvement is the most common reason people take these types of loans.

4. Favorable Repayment Rates

HELOC loans have low, flexible interest rates. The variable rates enable you to set up a repayment plan that suits your needs. The payments are not usually fixed. This feature makes a HELOC loan a better alternative compared to other debt lenders.

5. Provides Fast Cash

A home equity line of credit provides a system that allows homeowners access to available cash. The rates are much lower than consumer loans, and they can settle outstanding credit card debt. It is an easily accessible source of cash for emergency expenses.

6. Liquidity

A HELOC loan is an excellent way to get cash if you are thinking of moving. It gives you the necessary liquidity for a down payment on a new house. It allows you to cover basic expenses and makes relocation less strenuous.

7. Cushion After Losing Your Job

Job loss is a frustrating event for most people. A HELOC loan will enable you to provide for your family as you get back on your feet. It gives you a line of credit during this trying period.

8. Decrease in Property Value

Real estate is a fluid industry. Property values decline rapidly. Getting a home equity line of credit allows you to have access to cash before the value of your house declines. HELOC loans cushion you from asset decline and facilitate access to emergency funds.

9. Flexibility

The interest paid on a HELOC loan is only for the amount you use. This line of credit allows you to use as little or as much as you want to settle your expenses.

10. The Funds Can Be Used For Different Purposes

There are no restrictions in terms of spending. While most people use HELOC loans for home improvements, you can use the cash for various purposes. You can use it for medical expenses, school fees, or even buying new furniture.


A home equity line of credit is an excellent resource for people looking for fast cash. It is easy to get and is used as an investment tool. It is the best option to achieve liquidity if you can afford the payments.

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