What Is a HELOC?
A HELOC (Home Equity Line of Credit) is a revolving line of credit secured by your property. Unlike a cash-out refinance that gives you a lump sum and replaces your first mortgage, a HELOC sits as a second lien and lets you draw funds as needed during a draw period (typically 5-10 years). You only pay interest on the amount you have drawn.
For investors, HELOCs are a powerful tool for accessing capital quickly without refinancing existing favorable first mortgages. Pull equity from one property to fund the down payment on the next.
The investor play: Keep your low-rate first mortgage and stack a HELOC on top to access equity. Use the HELOC funds for down payments on new acquisitions, then pay down the line as rental income comes in. Repeat.
Who HELOCs Are For
- Homeowners with equity who want flexible access to funds
- Investors who want to tap equity without refinancing a low-rate first mortgage
- Borrowers who need capital on demand for deals, repairs, or emergencies
- Portfolio builders recycling equity across properties
Key Features
Draw period: 5-10 years (interest-only payments). Repayment period: 10-20 years. Combined LTV up to 80-90%. Variable rates tied to Prime or fixed-rate options. Available for primary, second homes, and investment properties. No closing costs on some programs.