How to keep your low-rate home loan while tapping equity

Rates for home equity lines of credit and home equity loans are just slightly above 52-week lows. While second-mortgage rates are typically higher than first-lien mortgage rates, the benefit is being able to protect your low-rate primary home loan, while accessing some of your equity with a HELOC or HEL.

According to real estate analytics firm Curinos, the average monthly HELOC rate has fallen to 7.23%. The 52-week HELOC low was 7.19% in mid January. The national average rate on a home equity loan is 7.44%. The 52-week low was 7.38% in early December 2025. Rates are based on applicants with a minimum credit score of 780 and a maximum combined loan-to-value ratio (CLTV) of less than 70%.

Choosing between a HELOC and a HEL is easy when you consider what you’re using it for. A HELOC allows you to draw cash from your approved line of credit as you need it. A home equity loan gives you a lump sum.

With mortgage rates still near 6%, homeowners with home equity and a favorable primary mortgage rate well below that may feel frustrated by not being able to access the growing value in their home. For those who are unwilling to give up their low home loan rate, a second mortgage in the form of a HELOC or HEL can be an appealing solution.

Home equity interest rates are different from primary mortgage rates. Second mortgage rates are based on an index rate plus a margin. That index is often the prime rate, which today is down to 6.75%. If a lender added 0.75% as a margin, the HELOC would have a variable rate beginning at 7.50%.

A home equity loan may have a different margin because it is a fixed-interest product.

Lenders have flexibility with pricing on second mortgage products, such as HELOCs or home equity loans, so it pays to shop around. Your rate will depend on your credit score, the amount of debt you carry, and the amount of your credit you’re drawing compared to the value of your home.

Most importantly, HELOC rates can include below-market “introductory” rates that may only last for six months or one year. After that, your interest rate will become adjustable, likely beginning at a substantially higher rate.

Again, because a home equity loan has a fixed rate, it’s unlikely to have an introductory “teaser” rate.

The best HELOC lenders offer:

A HELOC allows you to easily use your home equity in any way and in any amount you choose, up to your credit line limit. Pull some out; pay it back. Repeat.

You should also find and consider a lender offering a below-market introductory rate. For example, FourLeaf Credit Union is currently offering a HELOC APR of 5.99% for 12 months on lines up to $500,000. That introductory rate will convert to a variable rate in one year. When shopping for lenders, be aware of both rates.

Also, pay attention to the minimum draw amount of a HELOC. The draw is the amount of money a lender requires you to immediately take from your equity. Some banks will allow no, or small, initial draw requirements. Lenders that are not part of a bank with customer deposits are likely to require a large draw at closing.

The best home equity loan lenders may be easier to find, because the fixed rate you earn will last the length of the repayment period. That means just one rate to focus on. And you’re getting a lump sum, so there are no draw minimums to consider.

And as always, compare any annual fees or other charges, and the fine print of repayment terms.

Rates vary significantly from one lender to the next. You may see rates from nearly 6% to as much as 18%. It really depends on your creditworthiness and how diligent you are as a shopper. The national average for a HELOC is 7.23%, and 7.44% for a home equity loan. Those can serve as a guide when shopping rates from second mortgage lenders.

For homeowners with low primary mortgage rates and significant equity in their homes, it’s likely a good idea to consider a HELOC or a home equity loan now. You don’t give up that great mortgage rate, and you can use the cash drawn from your equity for things like home improvements, repairs, and upgrades. Of course, you can use a second mortgage for fun things too, like a vacation — if you have the discipline to pay it off promptly. A vacation is likely not worth taking on long-term debt.

If you withdraw the full $50,000 from a home equity line of credit and pay a 7.50% interest rate, your monthly payment during the 10-year HELOC draw period would be about $313. That sounds good, but remember that the rate is usually variable, so it changes periodically, and your payments will increase during the 20-year repayment period. A HELOC essentially becomes a 30-year loan. HELOCs and HELs are best if you borrow and repay the balance within a much shorter period.