8 HELOC alternatives to consider
Quick insights
- If a HELOC isn’t the right fit, there are other ways to access funds—including home-secured options like a home equity loan or cash-out refinance, as well as non-mortgage options such as personal loans, personal lines of credit, or credit cards.
- Depending on your situation, home equity investments, reverse mortgages, or 401(k) loans may also be considered, though some of these options may not be offered by Chase.
- Comparing repayment terms, closing costs, fees and how your home could be affected may help you narrow down which financing option aligns with your personal goals.
A home equity line of credit (HELOC) can feel like a flexible way to borrow money using home equity. But it isn’t the right choice for everyone. You may want steady monthly payments or prefer not to use your home as collateral at all.
Let’s explore how else you could access cash, fund home renovations, consolidate debt or cover major expenses. Each choice has its own rules for repayment, approval and risk. Comparing these details will help you find the fit for your financial goals.
Why should you consider alternatives to a HELOC?
A HELOC can offer flexible access to cash, but it may not work for everyone. Many HELOCs come with variable interest rates, so monthly payments could increase over time as market rates change. Here’s why some homeowners prefer exploring HELOC alternatives:
- Fixed monthly payments: Predictable payments may feel easier to budget for over time.
- Lump-sum funding: Certain options provide all the money upfront instead of borrowing gradually.
- No home collateral requirement: Some borrowers may not want to risk their home to access financing.
- Faster funding timelines: Unsecured loans and credit products may provide money faster in some cases.
- Simpler repayment structures: Some HELOC alternatives might feel easier to understand than revolving credit lines connected to your property.
Example: Kitchen renovation
On the one hand, a HELOC offers flexible borrowing access to complete the job at a steady pace and manage any unexpected repairs along the way. On the other hand, a home equity loan or other financial product could provide all the money needed for the job upfront. The job is done, and repayment begins.
8 alternatives to HELOCs
Not every homeowner wants a revolving credit line tied to their home. Below are eight HELOC alternatives that may be worth exploring, from home equity loans and cash-out refinances to 401(k) loans and flexible credit options.
1. Home equity loan
A home equity loan allows you to borrow a single lump sum of cash against the equity you’ve built. Unlike a HELOC, which works more like a credit card, a home equity loan usually comes with fixed monthly payments and a fixed interest rate. This financing option may work well for homeowners who already know exactly how much money they need for a large expense like home renovations, debt consolidation, a tuition bill or emergency home repairs.
For example, if you need $25,000, you get the full amount upfront with a home equity loan.
You start repaying it right away with steady monthly payments. Because you get all the money at once, you pay interest on the full amount from day one.
Good for: Homeowners who want a fixed amount to repay at predictable monthly payments.
Pros of home equity loans
- Fixed interest rates can make budgeting more straightforward.
- Getting all the cash at once helps pay for an expense.
- Interest rates may be lower than those of loans that don’t require collateral.
Cons of home equity loans
- Your home is used as collateral.
- You have to start making monthly payments right away.
- You typically need a certain amount of equity and creditworthiness.
Chase does not offer home equity loans.
2. Cash-out refinance
A cash-out refinance replaces your existing mortgage with a new, larger mortgage loan. You get the difference between the old mortgage loan balance and the new loan amount in cash. Instead of having two loans like you would with a HELOC, you just have one new mortgage. After closing, you get the extra cash as a lump sum.
Good for: Homeowners who want to refinance their mortgage and get cash by leveraging home equity.
Pros of a cash-out refinance
- Gives you cash upfront.
- Fixed interest rates could make monthly payments predictable.
- Rolls your mortgage and the new funds into a single payment.
- Often has lower interest rates than unsecured borrowing options.
Cons of a cash-out refinance
- Closing costs and fees may be higher than alternatives.
- You have a new mortgage timeline, such as 15 or 30 years.
- Your total mortgage loan increases.
- Your monthly payment might increase.
- Your home is used as collateral.
3. Personal loan
A personal loan gives you a lump sum of money without using your home as collateral. You repay it in fixed monthly payments over a set time. If you don't want to risk your home, this is a safer choice than a HELOC. It works well for smaller projects, moving expenses or medical bills. If you have a strong credit score, you can often get better rates.
Chase does not offer personal loans.
Good for: People who need money fast without using their home as collateral.
Pros of personal loans
- Home equity is not typically required.
- Funding may happen faster than some mortgage-backed products.
- Fixed monthly payments may simplify budgeting.
- Borrowers do not risk home equity.
Cons of personal loans
- Interest rates are usually higher than those of home loans.
- You can’t borrow as much as you might with a HELOC.
- Monthly payments may be high.
- Competitive rates may require excellent credit.
4. Reverse mortgage
A reverse mortgage allows eligible older homeowners, usually 62 or older, to convert part of their home equity into cash. Instead of you paying a mortgage lender, they pay you. The money usually comes as a lump sum, monthly payments or a line of credit. Repayment isn’t typically required until the homeowner moves, sells the property or passes away.
Good for: Older homeowners who are looking to access home equity but don’t want a monthly loan payment.
Pros of a reverse mortgage
- Can provide extra money during retirement.
- You don’t make monthly mortgage payments.
- You can stay in the home as long as you meet loan requirements.
- The money could be provided on different timelines.
Cons of a reverse mortgage
- Loan balances may grow over time as interest accrues.
- Fees and closing costs can be high.
- Home equity decreases, potentially leaving less for heirs.
- You’re still responsible for property taxes, insurance and home maintenance costs.
5. 401(k) loan
A 401(k) loan lets you borrow money from retirement savings if the plan allows it. The money arrives as a lump sum and can be used for various things. The interest paid often goes back into your retirement account instead of to a lender.
Good for: Borrowers who have retirement savings to use and want to avoid using their home as collateral.
Pros of a 401(k) loan
- You don’t use your home as collateral.
- Approval may be easier than with traditional lending.
- You pay the interest back to yourself (into your account).
- Money may be available quickly.
Cons of a 401(k) loan
- Retirement savings could lose growth potential.
- If you leave your job, you might have to repay the loan right away.
- Depending on the situation, you may face a 10% early withdrawal penalty and owe income taxes.
- Borrowing too much may hurt retirement goals.
6. Home equity investments
A home equity investment (or shared equity agreement) gives you cash upfront in exchange for a share of the home’s future value. Unlike a HELOC, you don't make monthly payments. Instead, you pay the company back later, usually when you sell or refinance the home.
Example: You receive $50,000 through a home equity investment agreement.
In exchange, the investment company may receive a percentage of the home’s future appreciation. If your home goes up in value, the company gets more money. If it goes down, they share the loss.
Good for: Homeowners who have a lot of home equity but prefer to avoid monthly loan payments.
Pros of home equity investment
- No monthly loan payments (in many cases).
- Can be a good choice when income is limited.
- Qualification requirements could be more flexible than those of traditional loans.
Cons of home equity investment
- You may give up a portion of future home appreciation.
- Contracts can be complex.
- In the long run, the arrangement could cost more than a normal loan.
Chase does not offer home equity investments.
7. Credit cards
Credit cards can be a good HELOC alternative for small costs or short-term needs. You can use the money right away for repairs or emergencies. Some cards offer low introductory interest rates. However, once the promo period ends, the interest rates can increase dramatically.
Good for: Smaller expenses, emergencies or debts that can be repaid quickly.
Pros of credit cards
- Fast and convenient access to money.
- No home equity required.
- Some cards offer bonuses and low promotional introductory rates.
Cons of credit cards
- Interest rates can become very high.
- Carrying a balance for a long time and making only minimum payments can get expensive.
- Missed payments generally hurt credit scores.
8. Personal line of credit
A personal line of credit works a lot like a HELOC, but it doesn't use your home as collateral. Instead of getting a lump sum, you can borrow money as you need it, up to a set limit. You only pay interest on the money you actually use. For example, if you have a $20,000 limit, you can borrow $3,000 now and leave the rest for later.
Good for: People who want flexible access to money without risking their home or leveraging equity.
Pros of a personal line of credit
- You can borrow money as you need it.
- You only pay interest on what you borrow.
- You don't have to use your home as collateral.
- You can reuse the funds as you pay them back.
Cons of a personal line of credit
- Rates are often variable, making monthly payments different.
- Interest rates may be higher than those of HELOCs.
- The borrowing limits could be smaller than those of home equity products.
- Strong credit can provide more favorable terms.
How to choose the best HELOC alternative for you
The right HELOC alternative often depends on how much money you need, how quickly you need funding, your comfort level with risk and whether you want predictable monthly payments.
Here are some key details to compare among the options:
- How the funds are received: Some financing options provide a single cash disbursement at closing. Other options allow flexible borrowing over time.
- Whether interest rates are fixed or variable: Fixed rates may provide more predictable monthly payments. Variable rates on loan products can be good or bad, often due to factors outside your control.
- If the home is used as collateral: Certain loans are secured by home equity, which creates some risk, while others are unsecured.
- How repayment works: Some products begin repayment immediately, while others delay repayment or allow interest-only payments early on.
- Closing costs and fees: Mortgage-based products may include home appraisal fees, mortgage lender fees or closing costs.
- Long-term financial goals: Borrowing against retirement savings or home equity could affect future financial flexibility.
In summary
HELOCs work well for some, but they aren’t your only option. Depending on your goals, your timeline, and how much risk you want to take, you can explore other choices. Take the time to compare fees, repayment rules, and how each option affects your home. Doing this will help you feel confident before you make a final decision.
