A home equity line of credit (HELOC) is a low-cost revolving line of credit that allows you to borrow the equity in your home; at a much lower interest rate than a traditional line of credit. If you have built up equity in your home beyond your original down payment you may be able to use it to obtain cheap and flexible financing.
Home equity is the current market value of your home minus the remaining balance of your mortgage. Essentially, it’s the amount of ownership of a property you have built up through both appreciation as well as reductions in the mortgage principle made through your mortgage payments. As you pay off your mortgage and build equity in your home, a HELOC gives you the freedom to reborrow from your equity, for your needs and wants. A HELOC is secured by your home and typically cannot exceed 65% of your home’s value.