What is HELOC?

HELOC, or Home Equity Lines of Credit, can turn your home value into cash as needed. It usually allows you to turn up to about 85% of your home’s value minus the balance remaining on your home mortgage.

Say you have a $500,000 home with a balance of $300,000 on your first mortgage and your lender is allowing you to access up to 85% of your home’s equity. You can establish a HELOC with up to a $125,000 limit:

  • $500,000 x 85% = $425,000

  • $425,000 – $300,000 = $125,000, your maximum line of credit limit

Reasons to get a home equity line of credit

A HELOC is best used for home repairs and upgrades. While it’s tempting to tap the easy-as-using-a-debit-card convenience of a HELOC for all sorts of things — a vacation, a new car, whatever — those splurges aren’t wealth-building uses of your home’s value and may put you at risk of losing the house if you default on the loan.

A bonus: The interest on your HELOC may be tax-deductible if you use the money to buy, build or substantially improve your home, according to the IRS.

“Home equity loans are usually issued with a fixed interest rate. ”

Home equity loan vs. HELOC

While a HELOC behaves like a revolving line of credit, letting you tap your home’s value in just the amount you need as you need it, a home equity loan provides a lump-sum withdrawal that’s paid back in installments.

Home equity loans are usually issued with a fixed interest rate. This can save you future payment shocks if interest rates are rising. Work with your lender to decide which option is best for your financing needs.


Ccino's banking partner offer a wide range of HELOC options. If you are interested in getting one, please email us at support@getccino.com to learn more.

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Ccino Team

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