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Owning a house is great with respect to personal finance. One can easily obtain secured loans by using the house as collateral. Moreover, secured loans are a lot more affordable than the unsecured variety. Those who have no mortgages to pay can easily avail of the regular secured loans. Those who are still paying off the mortgage installments can make use of the equity on their home to avail of various kinds of other loans. More importantly, these days, there is no need to rely entirely on home equity loans. There are other lines of credit that one can make use of.

HELOC or Home Equity Line of Credit is one mode that can be availed of instead of the home equity loan. In the case of HELOC, the bank provides a number of equity checks that can be used at various points to take a loan depending on one's equity balance. These equity checks, typically allow us to draw on a certain approved balance. The great thing about HELOC is that we are not required to take a lump sum all at one go. The checks give us the freedom to draw only as much as is required at the time.

This also means that the interest amount that we pay every month varies depending on how much we have drawn. Moreover, the rates of interest for home equity lines of credit are variable. They differ according to market situations. Thus, you might find yourself paying a higher interest rate one month, and a considerably lower one in the next. However, when selecting a loan, make sure that you go with the one that charges a lower APR overall. Also, make sure that you find out what the cap is on the interest that you will have to pay. This rate cap is different across states and lenders.

Thus, a HELOC is very different from the traditional home equity loan. Whereas HELOC allows one to advance oneself varying loan amounts over a period of time, a home equity loan amount is advanced at one time. Just as HELOC has variable rates, a home equity loan will charge a fixed rate of interest. This rate will not be subject to ups and downs depending on market conditions. As far as repayment terms are concerned, a home equity loan involves fixed monthly payments made over a fixed period of time. In HELOC, there is more flexibility. Overall, the two are very different, and picking one over the other would be a matter of personal choice.

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