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Fixed-Rate HELOC Loan Structures

07/15/2022 - Smart Home Buying & Ownership

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Convert a HELOC Loan into a Fixed-Rate Term Loan with WesBanco’s FlexLine of Credit

A home equity line of credit (HELOC) is a line of credit loan that leverages the equity built up in your home to secure the money for other borrowing needs. Equity is the difference between how much you owe on your mortgage loan and what your home is currently worth. Equity is just one benefit of owning a home and can be built by paying down your mortgage or if the value of your home increases. A HELOC loan is a low-cost option that can help you fund anything from home improvement costs to bill consolidation, education expenses and more.

When comparing home equity lending options, HELOC loans and fixed-rate term loans are often discussed. But with WesBanco’s Home Equity FlexLine of Credit, you can have the best of both worlds because a FlexLine provides the option to lock a portion of your balance into a fixed-rate term loan.

Understanding a Home Equity Line of Credit Loan

A traditional home equity line of credit loan is a revolving line of credit that allows you to use the equity in your home to fund expenses. A HELOC loan allows you to withdraw funds from the credit line for various needs during the draw period while making interest-only payments. The interest rate you pay is often lower than a personal loan or a credit card, making them attractive if you’ve built up significant equity in your home.

For example, if you have $75,000 line of credit, you can use $30,000 for a kitchen remodel and $5,000 to consolidate credit card debt. You can do all of this without reapplying for another loan because your line of credit is there to use as you need it. Plus, you still have $40,000 left on your master line to use as you wish for future expenses, while only paying interest on the $35,000 you borrowed. When the draw period ends, your HELOC repayment period will begin with payments made on both the principal and interest.

HELOCs have a variable Annual Percentage Rate (APR), meaning the interest rate and payment can change over the course of your HELOC term. Variable rates fluctuate over time because they’re dependent on interest rates that change with the market. This means that your HELOC payments are likely to fluctuate, as well.

Breaking Down a Home Equity Fixed-Rate Term Loan

A home equity fixed-rate term loan is another option for funding expenses. Home equity fixed-rate term loans also borrow against the equity built up in your home. Homeowners determine how much they need, apply for the loan and receive that amount in a lump sum. That lump sum will start accruing interest almost immediately, which is a major difference between a home equity fixed-rate term loan and a home equity line of credit loan.

A fixed-rate term loan’s interest rate and payment are fixed, which means that your payment on both the principal and interest are unchanging during the term of the loan. The agreed interest rate and term are based on your credit history and other factors, but it can offer peace of mind when it comes to budgeting and making payments each month.

Fixed-rate term loans offer a set amount for borrowing and make it easier to budget with fixed payments but lack the flexibility to draw on a credit line to acquire more funds. There is no revolving structure where you can borrow, repay, and borrow again during a draw period. You’ll have to refinance to secure a lower interest rate or additional funds.

Comparing Home Equity Lines & Fixed-Rate Term Loans

Most homeowners will have to choose between a HELOC loan and a home equity fixed-term loan when thinking about borrowing funds. A HELOC loan offers the luxury to borrow what you need when you need it, but with the uncertainty of variable payments, which could go up or down. This can make the fixed-rate structure of a term loan a bit more appealing. With WesBanco’s FlexLine of Credit, you can have the flexibility to convert a portion of the HELOC balance to a fixed-rate term loan at a favorable rate.

Convert a Portion of a Variable-Rate HELOC to Fixed-Rate Term Loan with FlexLine

Ever wish you could combine the benefits of a variable-rate HELOC loan and a home equity fixed-rate term loan? WesBanco’s FlexLine of credit has you covered. A FlexLine gives you the ability to turn a portion of your balance into a fixed-rate term, also called a partition, at any time during the draw period.

Our FlexLine is a low-cost flexible option to use the equity in your home to fund just about anything. The credit line is yours to use during the 15-year draw period and the best part is that a portion of the credit line can be locked into a fixed-rate term loan. That means you can get the best of both borrowing options: the flexibility of making draws as you need them from a HELOC loan and the option to convert a portion of your balance into fixed-rate term loan.

Here are just a few more benefits of our FlexLine of Credit:
• One-time application
• Interest-only payments for the 15-year draw period
• Ten-year principal and interest payback on the outstanding balance at the end of the draw period
• A 0.25% rate discount when using automatic payments from a WesBanco checking or savings account
• Convenient transfers with Online and Mobile Banking to your other WesBanco accounts

In addition to the automatic payment reduction, you’ll also receive a 0.50% rate reduction if FlexLine is the first lien on the home. So, if you don’t have a mortgage or any other liens on your home, a HELOC loan would be considered the first lien. If you already have a mortgage, a HELOC loan would be considered a second lien.

A FlexLine gives you an agile option for funding a home renovation project, an education expense or even a dream vacation. It’s just another way we’re looking out for our neighbors and providing the flexibility you need to fund your dreams.

See current rates and learn more about FlexLine.

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