Borrow against the house — two ways.

HELOC vs. home equity loan: which fits your project

The structural difference is line versus lump sum. A HELOC behaves like a credit card secured by the house — there's a draw period, usually ten years, during which any amount up to the line limit can be borrowed and repaid repeatedly, with a variable APR tied to prime. A home equity loan is the opposite: a single fixed-rate disbursement repaid on a fixed amortization schedule, typically over five to thirty years. The line is right when the budget is uncertain or the spending happens in stages — a multi-year remodel, an ongoing tuition bill, a bridge during a job transition. The lump-sum loan is right when the cost is one number, known up front, and rate certainty matters more than flexibility. Most borrowers who think they want a HELOC actually want a fixed loan, and vice versa — the test is whether the spending is one event or many.

How your home value sets the cap (the 85% LTV math)

Combined loan-to-value, or CLTV, is the single number that decides how much equity is reachable. The lender adds the existing first-mortgage balance to the new HELOC limit or home-equity-loan amount, then divides by the home's appraised value. Most lenders cap that ratio at 85%. Worked example: a home appraised at $600,000 with $350,000 still owed on the first mortgage gives a CLTV ceiling of $510,000 — meaning up to $160,000 of new home-equity borrowing on top of the existing balance. A few lenders, including Figure and some credit unions, will go to 90% CLTV for borrowers with 740+ scores; below 660, expect the cap to drop to 80% or even 75%. Appraisal cost, when required, runs $400–$700 and is paid by the borrower.

Variable HELOC rates: planning for the 2025-26 rate environment

HELOC APRs are almost always quoted as prime plus a margin. When prime moves, the rate moves — which means the monthly interest charge can climb mid-draw without warning. Through 2024 and into 2025, prime ranged between 7.5% and 8.5%, and most HELOC margins added 0% to 2% on top of that for prime borrowers. The headline 6.49% floor a few lenders advertise typically reflects a temporary introductory rate that resets to prime-plus-margin after six or twelve months. Stress-test the budget at prime plus three percentage points before committing. If a borrower can't comfortably cover the payment at a 11–12% APR, the line is too large. Some lenders, including Figure and TD Bank, offer a fixed-rate conversion option that locks part of an outstanding HELOC balance at a fixed APR — a useful hedge when rates are climbing.

When NOT to tap home equity

Home equity is the cheapest large-dollar borrowing most households can access — and that cheapness is the trap. Using it to pay off credit cards can work, but only if the cards stay paid off; otherwise the household ends up with the cards back at full balance plus a new lien on the house. Using it to fund a depreciating purchase — a car, a vacation, a wedding — converts a short-term cost into a thirty-year obligation secured by the residence. Using it to invest in the stock market layers leverage on leverage. Using it to start a business is a personal choice with real consequences if the business doesn't return enough to cover the payment. The shortlist of defensible uses is narrow: home improvements that add resale value, consolidation of higher-rate debt with a behavioral plan to stay out, and one-time emergencies where the alternative is a 25%-APR card. Everything else deserves a long pause.

Foreclosure risk: this is collateralized debt, not a personal loan

The defining feature of any home-equity product is the lien. The lender records a second mortgage against the property, which means missed payments don't just damage credit — they can ultimately lead to foreclosure, the same legal process that backs the first mortgage. In practice, second-lien holders foreclose less often than first-lien holders because the recovery economics are weaker, but the legal authority is identical. Cankicker Finance is not a lender, and our role ends at the comparison; the loss of a home if payments stop is real and worth weighing against the rate savings versus an unsecured personal loan. The right way to think about it: a home equity loan trades a higher APR (unsecured) for a lower APR plus a much harsher downside. For some borrowers and projects that's the right trade. For many it isn't, and a fixed-rate personal loan at 11–13% is the cleaner answer even though the monthly payment runs higher.