Compare the cost of paying off your current debts separately versus consolidating them into a Home Equity Line of Credit. See how much you could save on interest and how quickly you could become debt-free.
Add all debts you want to consolidate
Leave blank for minimum amortized payment
Total Monthly Payment
$200
Time to Pay Off
2 yrs 11 mo
Total Interest
$1,871
HELOC Monthly Payment
$49
Time to Pay Off
15 yrs 0 mo
Total Interest
$3,863
Monthly Saved
$151
Interest Saved
$-1,992
Time Saved
—
Monthly Payment
Total Interest
Monthly Payment
Total Interest
Payoff Time
Total amount paid including all interest
Understand the risks before consolidating with a HELOC
Your Home Is Collateral
A HELOC uses your home as collateral. If you can't make payments, you risk foreclosure. Unsecured debts like credit cards don't put your home at risk.
Variable Rate Risk
Most HELOCs have variable rates that can increase over time. Your payment could rise significantly if rates go up, potentially negating initial savings.
Longer Repayment Period
Consolidating into a longer term lowers monthly payments but may mean you pay more total interest over the life of the loan. Stay disciplined with payments.
Avoid New Debt
After consolidation, avoid running up new balances on your credit cards. Without changing spending habits, you could end up with both HELOC debt and new credit card debt.
High-interest credit card debt can cost thousands in interest over time. A HELOC typically offers a much lower rate since it's secured by your home equity. By consolidating multiple debts into a single HELOC payment, you can simplify your finances and potentially save a significant amount on interest — but only if you avoid running up new balances on the cards you've paid off.
A Home Equity Line of Credit (HELOC) is a revolving line of credit secured by your home's equity. It works like a credit card: you can borrow up to your limit, repay, and borrow again during the draw period (typically 5-10 years). After the draw period ends, you enter the repayment period where you pay back the principal plus interest over 10-20 years.
Most lenders require at least 15-20% equity in your home after accounting for the HELOC. For example, if your home is worth $300,000 and you owe $200,000, you have $100,000 in equity. A lender might let you borrow up to 80-85% of your home value minus your mortgage balance.
The biggest risk is that a HELOC is secured by your home — if you can't make payments, you could face foreclosure. Other risks include variable interest rates that may rise, the temptation to run up new credit card balances after paying them off, and closing costs or fees. Only use a HELOC for consolidation if you're disciplined about not accumulating new debt.
HELOCs typically offer lower interest rates than personal loans because they're secured by your home. However, personal loans don't put your home at risk and have fixed rates. A HELOC may save more on interest, but a personal loan is safer if you're concerned about putting your home on the line.
Initially, applying for a HELOC causes a hard inquiry that may lower your score slightly. However, consolidating high-utilization credit cards can significantly improve your credit utilization ratio, which often leads to a net positive impact on your credit score over time.
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