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HELOC terms, in plain English

Understand the terms that connect your home’s value to borrowing and repayment.

Equity and combined loan-to-value

Equity is the property’s value minus debt secured by it. Combined loan-to-value compares the relevant secured borrowing to the property value. A lender may count a retained revolving line’s full limit, not just its drawn balance.

Index and margin

The index is a benchmark that can change. The margin is added under the loan agreement. Promotional discounts, floors and caps can also affect the rate.

Draw period and repayment period

The draw period describes when you may borrow. The repayment period describes how the remaining balance must be repaid after draws stop. Your agreement controls both.

Approval and a planning estimate

A calculator illustrates arithmetic using your assumptions. Approval requires the lender to verify eligibility, value, credit, income, title and the actual program.