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HELOC vs. Other Loans

A HELOC or home equity line of credit is a revolving line of credit using your home as collateral. Many HELOCs offer an initial draw period where you can draw against your credit line followed by a repayment period where you can no longer draw on the line. HELOCs typically offer very competitive adjustable interest rates, making them an attractive alternative to personal loans, auto loans, and credit cards. If you’re a homeowner with equity built in your home, the special introductory home equity line of credit rate found at Benchmark Federal Credit Union offers a cost-effective solution for funding any home project or paying any emergency expense. Benchmark FCUs Ultimate HELOC offers other perks as well, such as an interest-only repayment option, no prepayment penalty after one year, and no inactivity fee.

HELOC vs. Personal Loan 

While a HELOC is secured by your home, a personal loan is an unsecured installment loan offering a fixed rate and fixed repayment terms. Personal loans can be used for any need from emergency expenses to large purchases or debt consolidation. While you don’t need collateral for a personal loan, the interest rates are usually not as low as a HELOC. Because they are secured, you can usually borrow a higher amount with a HELOC based on the equity in your home. Home equity lines of credit are great for expenses that are spread out over time, while a personal loan might be better for a small, one-time expense. If you have a HELOC that you are using for various expenses, it comes in handy and can save you from taking a personal loan when the need for cash or an unexpected expense arises. HELOCs typically have lower monthly payments than personal loans because they have lower rates and longer repayment terms. While you may be able to get cash in hand faster with a personal loan, it may come at the expense of higher rates and a higher monthly payment. Tap to learn more about personal loans.

HELOC vs. Credit Cards 

Home Equity Lines of Credit and credit cards are both revolving forms of credit. While a HELOC has a draw and repayment period, credit cards are open-ended. A HELOC can be a smart alternative to maxing out a high-interest credit card for home repairs or remodels, emergencies, medical expenses, or any other large expense. While a credit card can help you pay for things in the short term, higher interest rates may cost you in the long run. A HELOC is better than a credit card when paying for home improvement or repair projects, paying educational costs, consolidating debt, or for large medical bills or emergency expenses. A HELOC is also a smart choice when consolidating credit card debt or paying down other high-interest debt. Only homeowners can qualify for a home equity line of credit. Keep that in mind when considering your options. You may also be able to score a special 0%*** intro credit card right, like Benchmark FCUs VISA credit card, which will help you save on interest.

HELOC vs. Auto Loans 

While a HELOC is not typically used in lieu of an auto loan, it might provide the borrower with a lower rate and a longer repayment term. This is attractive to some borrowers looking to save. A downside of using a HELOC is that there may be closing costs involved that you wouldn’t have with a traditional auto loan. If you’re in the market for a new car, check out this auto loan deal.

A Home Equity Line of Credit offers flexibility and convenience 

A HELOC enables you to tap into the value of your home to cover any expense, planned or unexpected. A big plus, with a home equity line of credit you can borrow what you need when you need it. Keep in mind that the amount you qualify for with a HELOC is based on the equity built in your home. Because the loan is collateralized with your home, HELOC interest rates are often lower than personal loans, credit cards, and auto loans. Depending on the use of your HELOC funds, there may also be some tax advantages if the funds are used to substantially improve your home. Speak to your tax advisor to learn more.

If you are finding it challenging to fund a home repair or another large expense, learn more about Benchmark FCUs Ultimate HELOC. Make the right choice when choosing a lender to ensure you are getting the best rates, lowest fees, and most competitive terms. Consider your needs and the best loan to fit those needs.


***APR = Annual Percentage Rate. Rate subject to change & based on an individual’s credit history. 0% Intro Rate is valid for purchases & balance transfer from other institutions for 365 days from card opening. The 0% rate will be in effect for up to 12 months from card opening & after 12 months the rate on all unpaid balances will convert to the rate member qualified for at card opening. 0% APR promotional rate is only valid on new VISA® Platinum Cards & subject to expire without prior notice.



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