HESA vs HELOC
Choosing how to access your home equity is an important financial decision. Understand the key differences between a HESA and a HELOC so you can determine which approach better fits your needs.
Understanding your options
A HESA and a HELOC can both help you access the value you have built in your home. The difference is how you receive the money, what you pay, your ability to support the payments, and what happens to your home's future value.
Revolving credit line
HESA: A lump-sum payment to you based on the value of your home. You can use the funds for whatever you choose, with no monthly payments or interest for the entire 10-year term.
Monthly payments required
HESA: There are no monthly payments or interest charges. Instead, you settle the HESA when you sell your property, refinance and exit the agreement, or the 10-year term ends.
Strict income criteria
HESA: A HESA has no monthly payments, so you only need sufficient income to support your existing first mortgage, if applicable, along with your other financial obligations.
Absorb the full risk
HESA: You share in the agreed change in your home's value. If your home increases in value, we participate in the upside. If your home decreases in value, we share in the loss with you as partners.
Important considerations
Managing existing debt
A HESA can be used to pay off a second mortgage, eliminating the debt and its monthly payment. Using a HELOC to pay off a second mortgage simply replaces one form of borrowing with another, along with the ongoing payments and interest.
Thinking long-term
A HESA is designed as a long-term solution for homeowners looking to access their equity without adding another monthly payment. A HELOC can be a useful option for shorter-term funding needs that you plan to repay in the very near future.