A Home Equity Line of Credit, abbreviated as HELOC, allows a mortgager to borrow money using the home's equity as collateral. In a way, it helps the borrower to increase monthly savings by reducing payments. In this borrowing method, the equity that the borrower built up in the home acts as security for any financial needs.

The term equity in a Home Equity Line of Credit is defined as the difference between a home's market value and the amount outstanding on the mortgage. HELOC is entirely different from a standard loan, because the borrower is restricted to a period of time, preventing excess borrowing and limiting interest costs.

For people who don't have ready cash for a down payment, the Home Equity Line of Credit is a good alternative. HELOC have been in demand since the mid-80s. The loan provides the mortgager with extra cash in large amounts that can be used for expenses such as home improvements, property purchases, educational and medical expenses and small business expenses. HELOC works like a credit card because it has a revolving balance. It is sometimes referred to as a second mortgage.

The repayment period of HELOC is about 15 years, which is shorter than the first mortgage. The interest rate varies over the life of the loan. The payments also vary depending on the interest rate and the amount owed. Flexible repayments, flexible term and personalized equity checks are some of the features of HELOC. It also provides certain tax advantages that are not available with other loans. The line of credit in HELOC has no expiry date and the borrower can use it as long as he needs it.

In short, a Home Equity Line of Credit is a resource that can be used any time, for any kind of expense.