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Home Equity Loans

5 perks of using a HELOC to consolidate debt

Jun 27, 2025

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Written by

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Reviewed by

Key takeaways:

  • Using a HELOC to consolidate debt could get you flexible repayment terms and a chance to improve your financial situation.

  • In addition to debt consolidation, you could use a HELOC to make home improvements or repairs to boost your home's value. 

  • A HELOC could help you consolidate debt without having to pull all of your cash out of savings. 

Homeownership comes with certain benefits. You can decorate your living room with hubcaps and velvet posters. You can be a pet parent to your heart’s content. If you have built enough equity, you could borrow against it as part of your plan to improve your finances. (Equity is the difference between what you owe on the home and what it's worth.)

Using a HELOC to consolidate debt has some clear benefits over other forms of debt consolidation. The HELOC might help you pay off debt faster, save money on interest, and manage your finances more easily with fewer debt payments to make each month. 

Some not-so-obvious perks make a HELOC for debt consolidation even more attractive. 

Hidden (and not so hidden) perks when you consolidate debt with a HELOC 

A home equity line of credit (HELOC) offers flexibility since you can use the money for virtually anything, which includes debt consolidation.  

1. You decide how long to pay

If you don't know how a home equity line of credit works, here's a quick rundown. HELOCs have an initial draw period in which you can borrow, repay, and borrow more, up to your limit, as often as you like. Once that ends, you enter the repayment period. 

A typical HELOC draw period is five years, and repayment can last anywhere from five to 30 years. You can choose a repayment term that's most likely to fit your budget now and in the future. 

A shorter term pays your HELOC off faster, while a longer term lowers your monthly payment. 

2. Your credit score could improve

HELOC payments are reported to the credit bureaus. That means they show up on your credit reports and can affect your credit scores.

Credit scores tend to go up when you pay your bills on time. If you make your HELOC payments on time, you could see a positive impact on your credit (especially if you’ve struggled with late payments in the past). Payment history affects your scores more than any other factor. 

Credit scores also tend to like it when you keep your credit card debt low or very low. Your credit utilization is how much you owe on your credit cards in relation to your credit limits. If your credit card balances are zeroed out because you've paid them off with a HELOC, that could give your credit standing a boost.  

This only works if you avoid racking up new balances after you pay off your cards with the loan. Stash your cards away somewhere secure. Remove the card numbers from your favorite online store websites. 

Achieve isn't a Credit Repair Organization and doesn't provide or offer services or advice to repair, modify, or improve your credit.

3. You're not limited to debt consolidation

You can use a HELOC to consolidate debt, but that's not all you can do with it. You could also put some of your HELOC funds toward home improvements or repairs. 

For example, you might use part of your HELOC to replace your roof, upgrade your HVAC system, or remodel that 70s style kitchen you've never grown to love. That's the great thing about HELOCs—you get to decide how the money is spent. 

If the improvements you make increase your home's value, that's yet another perk. Should you decide to sell, you could land a bigger sale price, thanks to your HELOC. 

4. You don't have to drain your cash

If you have some cash tucked away, you might wonder if it makes sense to use it to pay off debt. One factor to consider is where you'd be if a financial emergency came along.

Without a rainy day fund, you might have to use loans or credit cards to cover an emergency. That could get expensive if you're stuck with a higher interest rate. 

When you consolidate debt with a HELOC, you can leave your emergency fund alone until you truly need it. You also don't have to worry about crazy-high credit card interest costs if you get a HELOC with a low rate. 

5. Your cat will like you better

Okay, so maybe your cat won't care one way or the other whether you get a HELOC to consolidate debt. Heck, you might not even have a cat. But you will feel better about yourself when you know you're making progress toward your financial goals.  

A HELOC lets you do that with less financial stress. It's easier to put your focus on other money goals when you don't have a pile of bills to worry about each month. Whether those goals are big or small, a HELOC could help you reach them. 

Ready to learn what you could do with a HELOC? See if you qualify for a HELOC from Achieve and borrow up to $300,000. 

Author Information

Rebecca-Lake.jpg

Written by

Rebecca is a senior contributing writer and debt expert. She's a Certified Educator in Personal Finance and a banking expert for Forbes Advisor. In addition to writing for online publications, Rebecca owns a personal finance website dedicated to teaching women how to take control of their money.

Jill-Cornfield.jpg

Reviewed by

Jill is a personal finance editor at Achieve. For more than 10 years, she has been writing and editing helpful content on everything that touches a person’s finances, from Medicare to retirement plan rollovers to creating a spending budget.

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Home Equity loans are available through our affiliate Achieve Loans (NMLS ID #1810501). Equal Housing Opportunity. Offers may vary and all loan requests are subject to eligibility requirements, application review, loan amount, loan term, income verification, and lender approval. Product terms are subject to change at any time. Offers are a line of credit. Loans are not available to residents of all states and available loan terms/fees may vary by state where offered. Line amounts are between $15,000 and $300,000 and are assigned based on product type, debt-to-income ratio and combined loan-to-value ratio. 10, 15, 20, and 30-year terms available. Minimum 600 credit score applies for debt consolidation requests (20 and 30 year terms require a minimum credit score of 640), minimum 700 applies for cash out requests. Other terms, conditions and restrictions apply. Fixed rate APRs range from 6.74% - 14.75% and are assigned based on underwriting requirements and offer APRs assume automatic payment enrollment which may provide a discount (autopay enrollment is not a condition of loan approval). All terms have a 5-year draw period with the remaining term being a no draw period. Payments are fully amortized during each period and determined on the outstanding principal balance each month. Closing fees range from $750 to $6,685, depending on line amount and state law requirements and typically include origination (3.5% of line amount) and underwriting ($725) fees if allowed by law. Property must be owner-occupied. Combined loan-to-value ratio may not exceed 80% (20 and 30 year debt consolidation requests may not exceed 75%), including the new loan request. Property insurance is required and flood insurance may be required if the subject property is located in a flood zone. You must pledge your home as collateral. Loan funding time is dependent on full application and documentation submission, average funding time is 11 business days for 2025, including rescission. Monthly/yearly savings claim is based on average monthly debt savings from originated loans for Q4 2024. Monthly/yearly savings varies based on each loan situation and can be more or less than $800/$10,000. Requirements to obtain 6.74% APR include: debt to income ratio <=15%; cumulative loan to value <= 50%, including new request; loan amount between $15,000 and $150,000; term of 10 years; FICO of 800+; and automatic payment enrollment. Contact Achieve Loans for further details

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