Bragg Mutual FCU
Bragg Mutual FCU

Home Equity Loan vs. Home Equity Line of Credit: What’s the Difference?

Home equity loans and HELOCs all involve borrowing against your home equity. However, even though both loans use your home as collateral, they differ when it comes to how you access loan funds and make repayments.

Knowing the Difference

A home equity loan provides borrowers with a fixed amount of money in one lump sum with fixed interest rates which means your monthly payment and rate remains the same from month-to-month. On the other hand, a HELOC offers a line of credit to draw funds from as needed with variable interest rates. A home equity line of credit through Bragg Mutual can work for your current financial needs.

Are There Advantages to a HELOC?

There are many benefits to getting a HELOC over another type of loan.

Flexibility – The biggest advantage of a HELOC is the flexibility it offers. Borrowers have the option to withdraw cash as needed and only pay interest on the amount used.

Low Closing Costs – HELOCs also have lower upfront costs as compared to home equity loans with some lenders offering to pay for closing costs. Bragg Mutual, for instance, offers loans with no closing costs for loans of $25,000 or more.

Low-Interest Rates – A HELOC offers lower rates than unsecured loans like credit cards or personal loans. Considering it applies a variable interest rate, your initial rate will lower than that of a fixed-rate home equity loan.

Tax Benefits – Since HELOC is a type of mortgage, individuals are eligible to claim the interest rate they pay as a tax write off.

Interest-only Payments – You’ll only need to pay the interest on what you have borrowed, which helps to lessen the impact on your budget.

Wondering if HELOC is a good option for you? Well, you’re in the right place. Visit to learn more or call 910-222-1500 to speak with one of our home loan specialists.

*Subject to credit approval. Rates disclosed reflect our best rates and may be different based on credit underwriting or services used. All loan rates are subject to change without prior notice. The information posted here is a service to our members. Although BMFCU strives for information accuracy, we do not guarantee or warrant information posted here.

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