The Differences Between a HELOC and Home Equity Loan

If you own your home and need to borrow money, a HELOC or Home Equity Loan are great options. You are essentially borrowing your own accumulated housing wealth with either option, however there are some differences. Based on your needs, one option may be a better choice than the other. Making the best decision comes down to what you are needing to borrow the money for and the timeline you are most comfortable with for paying it back. Here are some of the key differences between Home Equity Loans and Home Equity Lines of Credit (HELOCS):

Home Equity Loans:

  • You are getting a lump sum with a fixed interest rate
  • Knowing exactly what to expect for the monthly payment makes it easier to budget for
  • One drawback is that barrowing a large amount of equity in your home can work against your property value decreases


  • A HELOC works like a credit card
  • Has an adjustable interest rate – monthly payments can go up or down over time
  • Ideal when there is a need to borrow over a long period of time (ex: education expenses or home renovation projects)

Which is best for you?

If you are needing to borrow money for a short-term expense, you may want to go with a home equity loan. Learn more about home equity loans here. If you are planning multiple home renovation projects or trying to finance education costs, a HELOC may be the best option. If after weighing the pros and cons you are still undecided, our current promotion on HELOCs could be your tiebreaker. Right now, Bridge Credit Union is offering HELOCs with no closing costs or annual fees and just 2.19% APR through the end of the year. For complete details on our HELOC promotion, click here. If you still have questions, feel free to give us a call at 800.434.7300 or email our loan officers.