A HELOC — Home Equity Line of Credit — is a revolving line of credit secured by your home’s equity. It works similarly to a credit card: you are approved for a maximum credit limit, you borrow what you need when you need it, pay interest only on the amount drawn, and repay and redraw as your needs change.

How It Works

Your lender establishes a credit limit based on your home’s value, your outstanding mortgage balance, and your credit profile. During the draw period (typically 10 years), you can borrow up to the limit, repay it, and borrow again. You only pay interest on the outstanding balance — not the full credit limit.

Draw Period vs. Repayment Period

After the draw period ends, the HELOC enters a repayment period (typically 20 years) during which the line closes to new draws and you make principal and interest payments to repay the outstanding balance.

How the Rate Works

Most HELOCs are variable rate, tied to the Prime Rate. As the Prime Rate moves, your HELOC rate moves with it — typically with a monthly adjustment. This means your payment can change over time.

Lien Position

A standard HELOC sits in second lien position — behind your existing first mortgage. If your first mortgage is paid off, a HELOC can be in first lien position. The Wealth Builder HELOC offered by Lendia is specifically structured as a first-lien product that replaces your mortgage.