How to Choose Between a HELOAN and a HELOC

By Kyle Koller

Producing Branch Manager of UMortgage West - The #1 Producing Team at UMortgage

Do you need to tap into your home’s equity but feel stuck choosing between a HELOAN and a HELOC? The wrong choice can cost you thousands in interest and flexibility. Let’s break it down simply.

What is a HELOAN? A HELOAN or home equity loan gives you a one-time lump sum with a fixed interest rate. Your payment stays the same from start to finish. This option works well for large, planned expenses like home renovations, medical bills, or consolidating higher-interest debt.

How does a HELOC work? A HELOC or home equity line of credit, on the other hand, works more like a credit card. You borrow what you need, when you need it, during the draw period. Rates are usually variable, which means payments can change over time. A HELOC is often a better fit for ongoing or unpredictable expenses.

Here’s an important rule of thumb. Most lenders allow you to borrow up to 80% of your home’s value, including your current mortgage. Staying below that level can help protect your financial stability and prevent over-leveraging your home, which can lead to financial strain.

HELOAN vs. HELOC: Which option is better? That depends on your goals, your timeline, your financial goals, and how you plan to use the money. The smartest move is comparing rates, repayment terms, and how each option fits your long-term plan.

If you’re thinking about a HELOAN or a HELOC, let’s run the numbers together. As a trusted and licensed lender in Utah, I’m happy to walk you through your options and help you decide what makes the most sense for you.

You can book a free call with me using the link below:

Schedule a 1:1 call with Kyle.

You can also reach me at (801) 687-2018 or kkoller@umortgage.com. I’m happy to help you.