Pros of a HELOC

• Borrow only what you need and pay interest only on what you draw
• Keeps your existing first mortgage and its rate untouched
• Funds can be reused throughout the draw period as you repay
• Interest may be tax-deductible when used for home improvements (consult your tax advisor)
• Lower closing costs than a full refinance

Cons & Limitations

• Variable interest rates mean payments can rise over time
• Payments often jump when the draw period ends and repayment begins
• Your home secures the line, so missed payments put it at risk
• Some lenders charge annual fees or require minimum draws
• Requires sufficient home equity and solid credit to qualify

Best For: This loan is typically best for:

• Homeowners with strong equity who want to keep a low first-mortgage rate
• Ongoing renovation projects with costs spread over time
• A flexible safety net for recurring or unpredictable expenses
• Borrowers who prefer paying interest only on funds actually used