Difference Between HELOC & Home Equity Loan

Two types of loans enable you to borrow money using the equity in your home as collateral – the HELOC and the traditional Home Equity Loan. Bellco Federal Credit Union describes the difference between them below to help you decide which one may be right for you.

Bellco FCU is a member-owned, not-for-profit federal credit union. Since 1938, we have provided unique financial products and services to individuals and small businesses in Berks County, PA. 

We strive to improve the quality of life for our member-owners and align our products and services to help us achieve that mission. Our team will work with you to make sure you get the loan that’s right for you and your budget.

If you are already a member of Bellco FCU, you can apply online for a HELOC or Home Equity Loan. If you’re not yet a member, but live, work, worship, or attend school in Berks County, open a Primary Savings Account with as little as $5, and become a member today!

Home Equity Loan

The traditional Home Equity Loan is a second mortgage that is secured by the equity in your home and provides funds to you in a lump sum at a fixed rate for a fixed term (up to 15 years). It is similar to refinancing your mortgage but without many of the closing costs. The loan is repaid in budget-friendly fixed monthly payments, just like your original mortgage. 

A Home Equity Loan from Bellco FCU offers a variety of benefits:

  • Secured by the equity in your home

  • Fixed interest rate

  • Funds are paid to you in one lump sum 

  • Monthly payments remain the same over the life of the loan

  • No restrictions on use of funds

  • Useful for emergency funds, home remodeling, debt consolidation, unexpected major expenses like a large medical expense or a wedding

  • Local, Pennsylvania decision-making and processing 

Home Equity Line of Credit

A Home Equity Line of Credit can provide you with a certain amount of money, usually between 80-90% of the value of your home equity. The HELOC works somewhat like a credit card and is made available to you for a limited time period (typically 5 or 10 years). 

During what is called a “draw period,” you can withdraw funds from the line of credit whenever you need them. As you pay off the principal, your credit revolves, and you can use it again and again for the duration of the draw period.

A HELOC from Bellco FCU offers a variety of benefits:

  • Secured by the equity in your home

  • Adjustable interest rate (with a cap)

  • Withdraw the funds you need when you need them

  • Monthly payments vary based on the amount borrowed and the current interest rate

  • No restrictions on use of funds

  • Useful for periodic expenses, such as emergency funds, debt consolidation, tuition, and home improvements

  • Local, Pennsylvania decision-making and processing 

Bellco FCU provides a safe place for members to save and borrow at reasonable rates with exceptional customer service from start to finish.

To find out more about the difference between the Home Equity Line of Credit (HELOC) and the Home Equity Loan, and which one may better suit your needs, contact us today. We are eager to help you accomplish your goals!