A home equity line of credit, or HELOC, is a revolving type of secured loan where the collateral is the borrower’s property. The borrower is approved for a certain amount that they can draw upfront or after close similar to how credit cards are used. This tends to be a better choice than paying with a credit card as borrowing a greater amount causes an increase in interest and credit cards tend to have a higher interest rate as they are expected to be paid off at the end of the period.

With a HELOC, for a specified time, interest-only payments will be due prior to the principal balance being a part of the monthly payments due. This allows for big payments to be made, like college tuition, construction, etc. and more time to pay the balance off.