Back to all articles
View all blog posts under category Financial Education

HELOC vs. Home Equity Loan – Which Option is Best?

May 26, 2022

With fewer houses being listed for sale and increasingly high list prices, current homeowners are showing renewed interest in improving their homes with the support of a home equity line of credit, known as a HELOC, or a home equity loan.
HELOCs and home equity loans can be used for a variety of reasons, including home improvement projects, but may also be used to consolidate higher interest debt or make a large purchase.
Often referred to as second mortgages, both loan options leverage the equity within a home as collateral, which can typically in turn provide better interest rates than other personal loans and credit cards. There are also notable differences between the two. Understanding them may help you evaluate the better option for your needs.
“When considering whether a home equity loan or a line of credit is best for you, you will want to consider the following:  How soon do you need the funds?  Will you need the entire amount all at once, or a little at a time?  How quickly do you expect to pay the funds back?  Our Home Loan Specialists can then explain each of the options and help you select the best match for your needs,” said Jon Auger, EVP & Chief Retail Lending Officer.   
Home Equity Loan
A home equity loan provides a lump sum of money disbursed in one payment that is paid back in fixed payments during the life of the loan. Our home equity loans have fixed interest rates and repayment terms of 5 to 30 years.

Locking in a fixed interest rate on a home equity loan allows you to take advantage of the current rate environment and have peace of mind knowing that the interest rate is set. Having fixed monthly payments can make it easier for you to plan and budget over the life of the loan. With a home equity loan, you cannot borrow more if an emergency were to arise. In order to get more funds on an existing home equity loan, you would need to apply for a new loan at the then prevailing interest rate.

A HELOC is a revolving credit line that behaves like a credit card, allowing you to tap into it as needed. A HELOC is a low-cost fund that allows you access to the money that you need, when you need it. This can be a great option if you need additional flexibility. The interest rate is variable, meaning that your minimum payment amount may change over time depending on the amount borrowed and interest rate environment. Our credit lines start at $20,000 and do not require an account relationship.  

Let us help you determine the best option
Whether you’re dreaming of a new kitchen or bath, or possibly looking to consolidate higher interest debt, or make a large purchase, Middlesex Savings Bank offers a range of lending options. HELOCs and home equity loans offer:

  • No application fee
  • No closing costs

Contact an experienced Home Loan Specialist at 1-877-672-7654 to help guide you through your home equity loan options to achieve your financing goals.  


by Middlesex Savings Bank