Build on your investment with a HELOC

Whether you’d like to remodel your home, pay for college, or purchase a new car, a home equity line of credit (HELOC) can provide you with flexible funding to empower your vision as you take life’s next big step.

What is a HELOC?

A HELOC utilizes the equity in your home, allowing you, as the homeowner, to borrow money against the equity you’ve built up in your home. 

HELOCs operate similarly to a credit card, meaning that you can borrow money within a credit limit set by your lender, then pay back the borrowed money with interest. This approach to lending can offer you more flexibility, providing the ability to make payments and withdrawals as you need them.

Additionally, homeowners may be able to access the equity in a rental property, which could potentially double the size of the credit line available to you, particularly if you own your primary residence and investment property.

Home equity loans vs. HELOCs

Home equity loans tap into the value of your home to borrow money for one-time expenses. To do so, these loans grant you one lump sum with monthly payments tailored to fit your budget. Unlike home equity loans, HELOCs offer a line of credit that you borrow against when you need it. HELOCs also grant the ability to access funds multiple times during a draw period. Additionally, HELOCs provide additional stability with fixed monthly rates and a variety of available terms.

Typically with a HELOC, you’re given a maximum credit amount that you can borrow against based on the equity you have in your home. With this, you have the choice to use any or all of your credit line. Then, you are charged interest based on what you’ve actually borrowed. This is particularly advantageous if periods of time pass where you don’t need to use your HELOC because you won’t owe anything. 

How can you use a HELOC?

As a general rule with HELOCs, depending on your credit and amount of debt, you may be able to access up to 75-90 percent of the equity available in your home for funds. Tapping into your home’s equity can provide the purchasing power you need to take life’s next step.

Usually, there are no limits on how you can use your home equity, but there are several typical investments individuals with HELOCs make, including: 

  • Home improvements
  • Debt consolidation
  • College costs
  • Emergency expenses
  • Car purchases

Using a HELOC

What are the advantages of using a HELOC?

There are many benefits to HELOCs, if you are qualified. These include, but are not limited to:

  1. The ability to borrow exactly what you need

    HELOCs provide you with funding that’s accessible on your terms. Once the line of credit is available, you can begin using the funds as you see fit. There is also no requirement to borrow cash each month, which allows you to only borrow the money that you’ll be using.
  2. The potential that the interest may be tax-deductible 

    Itemized tax deductions take into consideration expenses, like mortgage interest. This could also allow you to deduct interest paid on a HELOC, if you use the money for home improvements. According to the IRS, interest payments on HELOCs are deductible if they are used to “buy, build, or substantially improve the taxpayer’s home that secures the loan.”

    To take advantage of this potential opportunity, consult with your tax advisor to learn more about your options.
  3. The possibility to qualify for a low Annual Percentage Rate (APR)

    HELOCs let you take advantage of the fact that mortgage interest rates are currently low. Sometimes, HELOCs can even have a lower interest rate and lower initial cost than that of credit cards. This can make HELOCs even more beneficial for ongoing projects or debt consolidation. 

Access the equity in your home when you need it.

From buying a new car to remodeling your home, when you need to borrow money to reach your goals, Westfield Bank is here for you, providing competitive rates and capabilities to match your needs. Let’s take life’s next step together. 

Let’s take life’s next step together.