Increasing HELOC

Written by True Tamplin, BSc, CEPF®

Reviewed by Subject Matter Experts

Updated on March 29, 2023

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Definition of Home Equity Line of Credit (HELOC)

Home equity lines of credit (HELOCs) provide homeowners with access to funds based on the equity they have in their homes. It is a form of revolving credit, meaning you can use it and pay it off as many times as needed throughout the loan period.

With a HELOC, the borrower only pays interest on the money they use. The amount someone can borrow and how long depends on how much equity they have in their home, as well as other factors like income and credit score.

When using a HELOC, it is important to understand all of the terms associated with the loan, such as fees or variable interest rates that may apply.

How HELOCs Work

HELOCs allow homeowners to borrow money against the equity they have in their homes. The lender reviews the borrower's credit score, income, and how much equity they have in their home to calculate how much money they can access with a HELOC.

The loan amount can be used for anything, from making repairs on the home, debt consolidation, college tuition, or any other purpose.

Once approved, borrowers can draw out funds as needed during the term of the loan. There are usually limits associated with this type of loan, such as a maximum limit of withdrawals or total amount available.

As payments or cash advances are made, more funds become available again up to the credit limit set at initial approval.

Like other forms of revolving loans, borrowers pay interest only on what is actually borrowed and not on what is accessible through the line of the credit agreement.

Things to Consider Before Increasing Your HELOC

Before you decide to increase your HELOC, there are a few things that you should consider:

  • Evaluate whether or not increasing your HELOC is the right choice for you and your financial situation.

  • Look into the terms of your current loan, as well as any potential fees associated with increasing your line of credit.

  • Consider any other debts that you may have and how taking out additional funds could affect them.

  • Compare all available options - such as loan modification and refinancing - so that you can get the best deal possible.

Options for Increasing Your HELOC

There are several different options available to help increase your HELOC, including the following:

Loan Modification

A loan modification involves negotiating with your lender to change the terms of your current mortgage agreement—usually involving a reduction in monthly payments or an extension on the repayment period.

When considering a loan modification, there are several factors to keep in mind: interest rate negotiation, fees charged by the lender, eligibility requirements, and potential tax implications associated with such changes.

Remember that many lenders have specific requirements for modifications, so it’s crucial to work closely with them throughout the process.


Refinancing is one of the most common strategies for increasing a HELOC. By refinancing your mortgage, you can get a new loan with significantly lower interest rates and improved repayment terms.

This can result in lower monthly payments as well as additional capital that can be used for other expenses or investments.

When refinancing a mortgage, it’s important to compare lenders and different types of loans before making a decision. Also, consider any closing costs associated with the process and whether or not they outweigh the potential benefits of a refinance.

Advantages and Disadvantages of Increasing HELOC

Advantages of Increasing Your HELOC

There is a handful of benefits that you get by increasing your HELOC:

Access to Funds for Large Expenses

A higher HELOC limit can enable you to finance larger expenses such as renovations, college tuition fees, or even a new car.

Debt Consolidation

This can help organize and streamline all your payments into one single loan with one payment schedule, which could potentially save you money over time depending on the interest rate offered on the loan.

Building Your Savings

This affords you access to extra funds for emergency situations or investments that could give you a financial boost in the future.

Payment Flexibility

Being able to customize payment possibilities allows for greater control over how much is borrowed and when you need to pay it back.

Increase Home Value

Using the extra money wisely can be beneficial in terms of increasing the value of your home if it is used towards projects such as repairs, remodeling, new insulation, or energy-efficient appliances.

Disadvantages of Increasing Your HELOC

There are also potential risks and drawbacks to take into account before making any changes:

Costly Fees

Taking out a larger loan or refinancing could result in additional costs such as appraisal fees, closing costs, or points which could increase your overall expenses.

Interest Rate Risk

In some cases, the interest rate on a HELOC may be adjustable, so depending on the conditions of the market, you might see an increase in interest over time, making it more expensive to borrow money.

Reduction in Credit Score

Depending on how much you increase your line of credit, this could affect your credit score since lenders will see that you’re taking on more debt than you previously had and might think that you’re at risk for defaulting.

Unwise Investment Decisions

Borrowing too much extra money and spending it carelessly may lead to regret in the future if not used responsibly for investments that have long-term benefits.

Neglecting Other Financial Goals

Having access to extra funds can sometimes distract us from our initial savings strategies by diverting our attention away from other important short-term goals such as saving for retirement or college tuition fees.

Final Thoughts

Home equity lines of credit can be a great financial tool for homeowners to access additional funds against the equity they have in their homes. You can further increase HELOCs through loan modifications or refinancing.

It is vital to evaluate any potential benefits and risks associated with increasing your HELOC so that you can make an informed decision as to whether or not it is the right move for you.

Increasing your HELOC can enable you to consolidate debt, finance larger expenses, or increase the value of your home by investing in renovations.

However, there may also be fees and higher interest rates associated with taking out a loan or refinancing, which could affect your overall expenses and credit score.

Weighing all these factors carefully will help ensure that the added borrowing power aligns with both short-term and long-term goals for maximum return on investment.

Speak to a lender or financial advisor to find out what your options are for increasing your HELOC.

Increasing HELOC FAQs

About the Author

True Tamplin, BSc, CEPF®

True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.

True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide, a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.

To learn more about True, visit his personal website, view his author profile on Amazon, or check out his speaker profile on the CFA Institute website.

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