🔑 Key Features of a HELOC
| Feature | Details |
|---|---|
| Type | Revolving credit (like a credit card, secured by your home) |
| Collateral | Your home (same property you live in or own) |
| Loan Amount | Based on available home equity (usually 60%–80%) |
| Disbursal | You can draw and repay multiple times |
| Tenure | 10–20 years typically (may have a “draw period” + “repayment period”) |
| Interest Rate | Floating interest; charged only on what you use |
| Repayment | Pay interest monthly during draw period; repay principal later or as per schedule |
🔄 HELOC vs Home Equity Loan (Second Mortgage)
| Feature | HELOC | Home Equity Loan |
|---|---|---|
| Disbursal | Revolving credit (use as needed) | Lump sum disbursal |
| Repayment | Flexible; interest-only or EMI-based | Regular EMIs from start |
| Interest Charged | Only on amount used | On entire disbursed amount |
| Flexibility | High (borrow multiple times) | Low (one-time borrowing) |
| Purpose | Ongoing expenses, education, medical | Large one-time costs (e.g., renovation) |
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✅ Advantages of a HELOC
💳 Flexible access to funds when you need them
🧮 Pay interest only on the used amount
🔁 Reusability—can borrow again after repayment
🏦 Lower interest than personal loans or credit cards
🧾 Can be used for multiple needs—education, business, repairs, medical emergencies, etc.
⚠️ Things to Watch Out For
📉 If home prices fall, your equity (and limit) may shrink
🏚️ Risk of losing your home if you default
📆 Some lenders require repayment of full principal after a few years (balloon payment)
💰 Variable interest rate can increase over time
📌 Is HELOC Available in India?
👉 HELOCs are not very common in India under that name, but similar products exist:
Loan Against Property (LAP) with overdraft or credit line features
Top-up home loans with flexible drawdown
Some banks (like SBI or HDFC) offer home loan overdraft accounts
🏦 Alternatives in India
| Similar Product | Description |
|---|---|
| LAP Overdraft | Credit line against property, withdraw as needed |
| Home Loan Top-Up OD | Extra loan over existing home loan with overdraft features |
| Flexi Personal Loans | NBFCs offer unsecured credit lines (higher interest though) |