Can you get a fixed-rate HELOC? How do they work?

Homeowners are increasingly exploring home equity lines of credit (HELOCs) and home equity loans as flexible ways to access their property’s value. A HELOC acts as a revolving credit line, allowing borrowers to tap into equity with options like variable interest rates or, in some cases, a fixed rate loan. While certain lenders and HELOC lenders offer fixed-rate HELOCs to ensure predictable monthly payments, not all provide this feature. Understanding the differences between a variable HELOC, a fixed-rate HELOC, and alternatives like a mortgage refinance or home equity loan—such as those outlined in home equity loan vs. home equity line of credit—is key to choosing the best loan for your financial needs and credit score.

Better offers a streamlined HELOC application process, delivering fast access to a line of credit—with funds available in as little as 7 days. Although Better doesn’t currently provide a fixed-rate HELOC, its variable-rate HELOC stands out with competitive HELOC rates, quick funding, and adaptable repayment terms. For borrowers seeking a credit line without the delays or strict conditions of traditional lenders,
Better’s home equity line of credit could be the perfect fit.

Curious about eligibility? Check out the essential HELOC requirements for key details.

What Is a Fixed-Rate HELOC?

A fixed-rate HELOC is a home equity line of credit that lets borrowers draw against their home’s equity at a steady interest rate. Unlike a typical variable-rate HELOC, where monthly payments shift with market trends, a fixed-rate HELOC offers a rate lock, ensuring consistent monthly payments throughout the repayment term. This stability appeals to borrowers who value predictability, especially when managing a loan alongside a mortgage.

This type of credit line shields borrowers from rising variable interest rates, simplifying budgeting. However, fixed-rate HELOCs often start with higher HELOC rates than their variable counterparts and may limit flexibility in accessing funds or adjusting payments. Better’s variable-rate HELOC, by contrast, provides lower initial HELOC rates and adaptability, while its home equity loans and cash-out refinance options offer fixed-rate loan alternatives with a lump sum payout.

....in as little as 3 minutes – no credit impact

How does a fixed-rate HELOC work?

A fixed-rate HELOC operates much like a standard HELOC but with a locked interest rate. Your rate depends on factors like your credit score, current HELOC rates, and offerings from HELOC lenders. Here’s the breakdown:

• Draw period: Typically 5-10 years, during which you can borrow from your credit line as needed.
• Repayment phase: Usually 10-20 years, where you repay the loan balance plus interest via monthly payments.
• Rate lock: With a fixed-rate HELOC, the interest stays constant, even if market variable interest rates climb.

Better’s variable-rate HELOC offers flexibility during the draw period, letting borrowers adjust to shifting needs. While it lacks a fixed-rate option, its competitive HELOC rates and lack of rigid terms make it a strong alternative for accessing a line of credit.

Fixed-rate HELOC pros and cons

Fixed-rate HELOC pros

While Better doesn’t offer this, here’s why some borrowers prefer a fixed-rate HELOC:

• Predictable monthly payments: A rate lock ensures steady payments, aiding budgeting for mortgage and loan expenses.
• Protection against rising rates: Shields you from hikes in variable interest rates, keeping costs stable.
• Financial stability: A consistent rate supports long-term planning for borrowers.

Fixed-rate HELOC cons

Here’s why some opt for Better’s variable credit line instead:

• Higher interest rates: Fixed-rate HELOCs often carry higher starting HELOC rates due to lenders assuming more risk.
• Less flexibility: A locked rate limits benefits if variable interest rates drop.
• Fees and penalties: Some HELOC lenders charge for conversion or early repayment, reducing value.
• Harder to find: Fewer lenders offer this loan type.

Feature	Variable-rate HELOC (Better)	Fixed-rate HELOC
Predictability	Payments vary with market HELOC rates	Stable monthly payments
Interest Rate	Lower initial variable interest rates	Higher, locked HELOC rates
Flexibility	Adapts to changing needs	Limited once rate is fixed
Protection	Payments may rise with rates	Shields from rate increases
Cost potential	Savings if rates stay low	Higher starting costs
Rate drop benefits	Lower payments possible	No advantage if rates fall
Fees	No hidden costs with Better	Possible penalties from lenders
Funding speed	Cash in as little as 7 days	Often slower

Other factors to consider with a fixed-rate HELOC

Inflation/interest rate trends

A variable-rate HELOC adjusts with market shifts, potentially lowering monthly payments if HELOC rates drop. A fixed-rate HELOC suits borrowers expecting rates to rise. However, switching back to a variable credit line can be tricky if rates fall, locking you into higher costs. For a deeper dive, explore home equity vs. refinance options.

Cost and fees

Some HELOC lenders charge for early payoff or rate conversion. For example, Bank of America imposes a $450 fee for closing a HELOC within three years, while U.S. Bank charges 1% of the credit line (up to $500) if repaid within 30 months.

Minimum borrowing requirements

Certain lenders require a minimum lump sum to qualify for a fixed-rate HELOC, which may not align with all borrowers’ plans. Better’s HELOC, however, keeps things simple—learn more about essential HELOC requirements.

Why aren’t all HELOC rates fixed?

Variable-rate HELOCs dominate because they adjust with variable interest rates tied to Federal Reserve benchmarks, offering flexibility that fixed-rate options can’t match. This adaptability suits most borrowers and HELOC lenders.

Why Better’s HELOC stands out

Though Better doesn’t offer a fixed-rate HELOC, its variable-rate HELOC excels with:

• ✅ Fast Funding: Access your credit line in as little as 7 days.
• ✅ Competitive Rates: Lower variable interest rates keep costs down.
• ✅ Flexible Terms: Repay your loan without penalties.

Better’s HELOC lets borrowers tap up to 90% of their home’s value (max $500,000) across primary, secondary, and investment properties—outpacing many HELOC lenders.

Feature	Better HELOC	Other lenders
Appraisal fees	Often not required	Typically $500-$700
Cash access	Up to 90%, $500K max	Usually 80-85%
Availability	All property types	Often primary homes only
Closing speed	Cash in as little as 7 days	Typically 30-45 days
Interest rates	Competitive variable rates	Varies
Transparency	No hidden fees	Fees may be unclear

Fixed-rate HELOC alternatives

Home equity loan

A home equity loan delivers a lump sum at a fixed interest rate, with consistent monthly payments over a set term. For Better borrowers looking to avoid variable rates, a home equity loan (or HELOAN) is a great option—compare it with a HELOC in [home equity loan vs. home equity line of credit](A home equity loan delivers a lump sum at a fixed interest rate, with consistent monthly payments over a set term. For Better borrowers looking to avoid variable rates, a home equity loan (or HELOAN) is a great option—compare it with a HELOC in home equity loan vs. home equity line of credit](https://better.com/content/home-equity-loan-vs-home-equity-line-of-credit).

Cash out refinance

A cash-out refinance replaces your mortgage with a larger loan, providing the difference in cash, at a fixed rate. Better’s option could allow you to both lower your interest rate and access cash from your home's equity.

Factors to consider when comparing HELOC options

• Interest rates: Compare fixed vs. variable HELOC rates.
• Fees: Watch for penalties or upfront costs from lenders.
• Repayment terms: Better’s HELOC offers flexibility with no early payoff fees.
• Draw/repayment periods: Confirm timelines for accessing and repaying your credit line.

Conclusion

A fixed-rate HELOC provides predictable monthly payments and shields against rising variable interest rates, but Better’s variable-rate HELOC shines with competitive HELOC rates, rapid funding, and flexible terms. For borrowers seeking a line of credit or loan to unlock home equity without traditional lenders’ delays, Better’s home equity line of credit delivers. Unsure which option suits you? Explore home equity vs. refinance for more insights.

Apply for Better’s fast HELOC today and access your home’s value in as little as 7 days!

....in as little as 3 minutes – no credit impact