When you take out a home equity line of credit, or HELOC, you pay only the interest for a specified amount of time before you start repaying the principal, too. That’s because a HELOC is an interest–only product during the years of the loan term that the borrower can draw against the line of credit.
Regarding this, how does an interest-only home equity loan work?
An Interest–Only HELOC allows you to borrow money, repay it, and borrow again as needed during your draw period. During that time of revolving access to cash, you’ll be making the lowest possible monthly payment, because you’re only required to pay the interest until the draw period has ended.
Besides, what is a good interest rate on a home equity loan?
As of May 19, 2021, the average
|Loan Type||Average Rate||Average Rate Range|
|10-year fixed home equity loan||5.72%||3.25%–7.49%|