• A home equity line of credit (HELOC) can be useful when you are hoping to borrow a lump sum to renovate your home, make a major purchase, or consolidate debt. Using the equity in your home as collateral, a HELOC is revolving credit. This open-ended loan may be be charged up or paid down during the loan term. The rate of interest changes (usually monthly).

    In a HELOC, your lender approves you for a predetermined credit amount - the largest amount you can borrow at any given time under the plan. In setting the credit limit, your pay-rate, outstanding debt, credit history and any other financial obligations will be considered. An appraisal will be required on your home to determine the home's market value. Your credit limit will be set considering all of your financial information, as well as a percentage of your home's appraised value, which is then subtracted from the balance owed on your present mortgage loan.