HELOC

Two phases

During the draw period — often 5 to 10 years, sometimes longer — you can take advances and typically pay interest on the outstanding balance. When the draw period ends, the line converts to a repayment phase and the payment amortizes.

Combined loan-to-value caps commonly land between 80% and 89%. The first mortgage is not replaced.

The variable-rate point

Most HELOCs price off prime plus a margin. A payment that is comfortable at origination can rise. Some lenders let you lock a portion. Read whether the lock is offered before you treat the line as fixed.