What Is a Home Equity Line of Credit, or HELOC?

A home equity line of credit (HELOC) is a second mortgage allowing homeowners to borrow against their home equity, typically up to 85% of the home's value minus the mortgage balance. It features a draw period of 10 years for borrowing and a repayment period of 20 years for principal and interest payments. HELOCs usually have adjustable interest rates, which are generally lower than credit card rates. They can be used for significant expenses like home improvements, but come with risks, including potential foreclosure if payments are missed.