A revolving credit line secured against the equity in your home.
A HELOC allows you to borrow up to 65% of your home value (combined with your mortgage, total lending cannot exceed 80% LTV). The interest rate is variable, typically prime + 0.5% to prime + 1.0%. You only pay interest on what you borrow. HELOCs are popular for home renovations, investment, and emergency funds. Unlike a mortgage, a HELOC has no fixed repayment schedule, which can be both an advantage and a risk if not managed responsibly.
Related terms: Loan-to-Value (LTV) Ratio | Prime Rate