A Home Equity Line of Credit is referred to be lenders as HELOC.

HELOC is a secured loan, in which you are borrowing against the equity that has been built in your property. Typically, the lenders will let you borrow up to a set limit “For example 80 percent” of your home’s equity also known as “LTV or loan-to-value”. When you obtain a HELOC, you are given a draw period or length of time during which your line of credit will stay open. 

Heloc breakdown:

HELOC payments are based on the interest which is set by the lender, the interest is calculated on the amount that you borrow only (For example $100,000 line, the amount used is $10,000, the interest charge is on $10,000 only). Any additional amount on top of your minimum will pay off a part of the principal, those funds go back to your line amount. When the draw period reaches maturity, you enter a repayment period, where you begin paying back the remaining principal on your HELOC, plus calculated interest. 


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