What Can I Do With the Money From a Credit Union HELOC?

What Can I Do With the Money From a Credit Union HELOC?

Do you need funds but want to avoid taking out a personal loan or charging a credit card? If you own a house, you may consider borrowing from your home’s equity. Vermont Federal Credit Union offers two options to access home equity: home equity loans and HELOCs.

A home equity loan is what it sounds like—a loan against your home’s equity—but what is a credit union HELOC? What are the benefits of taking one out, and what can you do with the money it provides? Read on to find out.

What Is a Credit Union HELOC?

HELOC stands for Home Equity Line of Credit. It’s a way of cashing in on the equity you’ve built in your home, and your mortgage does not need to be paid off to do so. Home equity is the difference between the value of your home and what you owe on your mortgage. Most credit union HELOCs will give you access to up to 85 percent of your home’s equity!

A significant benefit of HELOC over a home equity loan is flexibility. While a home equity loan comes as a lump sum of cash, this line of credit allows you to draw money from an approved amount of your equity as needed. A HELOC will remain open for a fixed draw period, followed by a repayment period. The length of the draw period can depend on the credit union, but it is usually about ten years. Borrowers are typically only required to make payments once they enter the repayment phase of the loan.

It’s essential to keep in mind that both HELOCs and home equity loans are essentially second mortgages. Your home is used as collateral to secure the loan, and it can be at risk if you do not make your monthly payments. So, assess your financial situation and talk to your lender to ensure accessing your home equity is the right option for you.

How Can I Use the Money From a Credit Union HELOC?

The only right answer to this question is whichever use is the right one for you. There are no restrictions on how you allocate the funds you receive from a HELOC. Here are some ideas to inspire you and show how a HELOC can be of benefit.

Pay Off or Consolidate Your Debts

Do you have outstanding debt from your credit cards? Do you feel like it’s impossible to pay off your student loans? Are you making multiple debt payments every month? When you have debts like these examples, they can feel like quite a burden.

Many people consider using the money from a HELOC to consolidate and pay off their debts. One of the reasons people choose this option is because HELOCs usually come with lower interest rates than other debt types. Also, if you have multiple debts with different due dates and different interest rates, a HELOC can allow you to narrow that down into a single monthly payment under a single, low interest rate.

Use It for Home Improvements

Since the funds come from your home equity, many people choose to use their HELOC funds to invest back into their homes. You can use your HELOC for major renovations, a new addition, or even new appliances. Using a credit union HELOC is a wise move for many homeowners, as it can potentially increase their home’s property value with wise improvement investments.

Buy an Investment Property or a Vacation Home

Another long-term investment you could make with the money from your HELOC is a down payment on a second house. Offering a large down payment helps you stand out amongst competition as a serious buyer, and a HELOC can help you to do just that. Purchasing a vacation home or investment property means your equity can really pay off for years to come!

Save for Retirement

Speaking of long-term costs, a HELOC can help you build up retirement funds or help with other costs of aging. For instance, the home repairs HELOC goes toward could include making your home more accessible for people with limited mobility.

Opening or Improving Your Own Business

You’ll need some cash to get your business off the ground, and a HELOC could provide that. If you already have a business, a HELOC could be used toward important company expenses, such as buying inventory or increasing warehouse space.

Educational Expenses

Using a HELOC to fund your or your loved one’s education can be another great investment in the future. This could mean saving on student loan costs for your children or yourself. This might be a great time to pursue your true passion, finish your degree, or get a more advanced degree that would boost your career.

Special Occasions

Special events such as weddings or once-in-a-lifetime vacations can be incredibly costly. A HELOC could help you cover the costs for a one-time event.

Keep in mind that covering such expenses doesn’t come with the same rate of return as the above options. So it’s important to consider your situation carefully to determine whether a HELOC is a smart financial call at this time.


Of course, another occasion that may come up is an emergency. If you experience unexpected medical or home expenses, for instance, having a HELOC on hand will give you peace of mind in case something happens.

What Will You Do With the Money From a Credit Union HELOC?

Does a HELOC sound like the right option for you? Explore more about Vermont Federal Credit Union’s HELOC and the other loans we offer by visiting our website. You can even start your application online to help you get one step closer to securing your funds.

If you’re not yet a Vermont Federal Credit Union member, this might be the perfect time to join and start experiencing benefits such as low interest rates and fees on HELOCs. Members also get access to our incredible customer service and our award-winning online banking and mobile app. We look forward to helping you make your money work for you!

About Vermont Federal Credit Union
Vermont Federal Credit Union is a $900 million-plus full-service, not-for-profit, cooperative financial institution that has served Vermonters for more than 70 years, with eight locations currently serving over 50,000 members. Members are part of a cooperative, meaning they share ownership in the Credit Union and elect a volunteer board of directors. Vermont Federal Credit Union provides membership to anyone who lives, works, worships, or attends school in all of Vermont. Vermont Federal Credit Union is committed to supporting its communities and helping Vermonters prosper, no matter where they may be on life’s journey. Learn more about Vermont Federal Credit Union. 

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