- Instant answersResults update as you type.
- Private by designRuns in your browser. Nothing is sent.
- Share, print or citeCopy a link with your numbers.
Side by side ($50,000, example rates)
| Option | Rate | Term | Monthly payment | Interest + fees |
|---|---|---|---|---|
| Personal loan (3% fee) | 11% | 5 years | $1,120.74 | $17,245 |
| HELOC, $500 closing | 8.5% | 10 years | $619.93 | $24,891 |
| HELOC, $500 closing | 8.5% | 5 years | $1,025.83 | $12,050 |
The rates are illustrations, not quotes. HELOC rates are usually variable and track the prime rate, so the payment can change.
How they differ
| HELOC / home equity | Personal loan | |
|---|---|---|
| Collateral | Your home (lien) | None (unsecured) |
| Rate type | Usually variable (HELOC); fixed for home equity loans | Usually fixed |
| Typical costs | Appraisal, closing costs, annual fees on some lines | Origination fee on some loans |
| Speed | Weeks (appraisal and title work) | Often days |
| Equity needed | Yes; lenders cap total borrowing against the home | No |
| Interest deduction | Possible if used to substantially improve the home (IRS Pub. 936) | Generally no |
When each tends to fit
- HELOC: larger or staged projects, you have substantial equity, and you are comfortable with a variable rate and a lien on your home.
- Home equity loan: one large project with a known cost, and you want a fixed payment.
- Personal loan: smaller projects, little equity, need the money fast, or you do not want to put your home up as collateral.
Risk: if you cannot repay a HELOC or home equity loan, you can lose your home. Missing personal loan payments damages your credit and can lead to collections, but your home is not directly at stake.
Background: CFPB: What is a HELOC?; FTC: Home equity loans and lines of credit; IRS Publication 936.
Related
Frequently asked questions
Is a HELOC cheaper than a personal loan?
Usually the rate is lower, but a longer repayment term and closing costs can make the total cost higher. Compare at the same term, as the calculator does.
Can I use a HELOC for home improvements?
Yes; renovations are one of the most common uses, and interest may be deductible when the funds substantially improve the home securing the line.
Which is faster to get?
Personal loans often fund within days. HELOCs usually take weeks because of the appraisal and title work.