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A Better Tomorrow

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Home Equity Line of Credit vs. Home Equity Loan: Which is Right for Me?

May 27, 2020

With a new season upon us, many homeowners take time in early summer to look at their home and plan for an upgrade. Whether these homeowners are looking at bathroom and kitchen remodels, landscaping, or even finishing a basement, using one’s home as equity for a loan can be a great option. 

However, one decision needs to be made at the outset of the home improvement process: 

Should I use a home equity loan or a home equity line of credit (HELOC)? Let’s look at some differences: 

Home equity loan: Home equity loans allow you to borrow a fixed amount of funds based on the equity in your home. You get the convenience of a fixed rate and terms that can fit your budget. This option is usually best for borrowers who prefer a fixed monthly payment. To learn more,  click here.

Home equity line of credit: Home equity lines of credit function a bit more like a credit card, compared to a Home Equity Loan. A HELOC gives borrowers a line of credit they can draw against as funds are needed. Borrowers have the convenience of accessing funds when they need it, paying interest only on the amount drawn.  Centier Bank offers both variable and fixed-rate HELOCs. To learn more, click here

These home loans are also great tools for those in need of credit card consolidation because the rates offered by a lender may be less than those offered by the credit cards.  The answer to which option is right for you really depends on what your needs are and what you are looking to do with loan or credit line. 

Will you need a large sum of money at one time or are you thinking about projects that may have variable costs over time? What are the rates available when it is time to take out the loan or line? How much can you borrow against your home (also known as your loan-to-value (LTV) ratio)? 

If you need help establishing your needs, be sure to explore our Financial Calculators page. If you are ready to find out more information,  a Centier Bank Consumer Loan Specialist would be happy to help. You can either stop by your local branch or visit us online at