Want to consolidate debt? A HELOC could help.

Debt can be a daunting thing, but a home equity line of credit (HELOC) can help make it more manageable. By consolidating your debts into a HELOC, you may be able to enjoy a lower interest rate while streamlining your bills and getting some extra time to pay back your debt.

If you’re less familiar with HELOCs and how they work, take a look at our other helpful article, 8 Common HELOC Questions.

Consolidating Debt to Save on Interest

If you have multiple high-interest debts, financing a HELOC could help you lower the amount of interest you pay on them. Since a HELOC is secured by the equity in your home, the lender’s risk is reduced. Because of this, interest rates on HELOCs are often lower than on unsecured debts, such as credit cards, student loans, and personal loans. By using the funds from a HELOC to pay off your high-interest loans, you can consolidate your debts onto the HELOC and enjoy a lower interest rate.

Streamlined Payments

Consolidating means combining multiple debts into one single debt. This means that instead of keeping track of when and to whom you owe money, you only have to worry about making payments to one creditor going forward. This simplifies your financial obligations, helps you to stay organized, and reduces the chances of missing payments and getting charged late fees.

Extended Repayment Period

HELOCs typically come with longer repayment terms compared to credit cards or personal loans. By consolidating your debts into a HELOC, you can extend your repayment period, resulting in lower monthly payments and improved cash flow.

Considerations & Precautions

Responsible Borrowing

Consolidating debt with a HELOC should not encourage you to overspend. Don’t let a lower interest rate and a longer repayment period tempt you to spend more instead of taking advantage of your chance to save. Discipline and a solid financial plan are crucial to ensure long-term success.

Potential Home Equity Risk

Since a HELOC uses the equity in your home as collateral, defaulting on HELOC payments can put your property at risk of foreclosure. Assess your financial situation carefully and have a solid repayment plan in place before using a HELOC.

Getting Started

Apply for your HELOC here or speak with a Cyprus home equity advisor to see if consolidating your debt with a HELOC is the right choice for you. Our team of experts will help you understand the consolidation process and can answer any other questions you may have. Email HomeEquity@CyprusCU.com or call 801-260-7606.