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What Are the Benefits of a Home Equity Loan or Line of Credit?

what are the benefits of credit

by Don Rafner

Home equity loans and lines of credit come with several benefits.

Low Interest Rates

The biggest benefit of both home equity lines of credit and home equity lump-sum loans is low interest rates. A $30,000 home equity line of credit came with an average interest rate of 5.1 percent, and a home equity loan for the same amount carried a 7.49 average interest rate in late July, 2010, according to These rates are far lower than the typical interest rates charged by credit card companies. The Index Credit Cards website reported that the average interest rate on consumer credit cards stood at 16.85 percent in mid-July of 2010.


A home equity line of credit offers homeowners flexibility in how they spend their money. In fact, homeowners never have to draw on their line of credit. Some homeowners use it as a form of financial protection, knowing that they can draw on their home equity

line in case of emergencies like roof repairs or car expense. But if emergencies don't arise, homeowners can simply leave their home equity line of credit untapped. Homeowners must make payments on their home equity lines of credit only when they use it, much like with a typical consumer credit card.

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