Managing multiple debts can feel overwhelming, especially when you’re juggling credit cards, personal loans, or medical bills with high interest rates. One way homeowners often simplify and save money is by using a home equity line of credit (HELOC) to consolidate debt.
What Is a HELOC?
A HELOC is a revolving line of credit secured by your home’s equity, the difference between your home’s value and what you owe on your mortgage. Unlike a traditional loan, a HELOC functions more like a credit card: you can borrow as needed up to a set limit, repay, and borrow again during the draw period.
Why Use a HELOC for Debt Consolidation?
- Lower interest rates: HELOCs generally have lower rates than credit cards or unsecured loans. This means more of your payment goes toward reducing principal instead of interest.
- Flexibility: You can pay off multiple debts at once and then focus on making one monthly HELOC payment.
- Cash flow improvement: Lower rates and potentially lower monthly payments can free up cash for savings or other priorities.
Steps to Consolidate Debt with a HELOC
Evaluate your equity.
How much you can borrow is based on your home’s value (minus your mortgage balance). Climb can help get a HELOC that works for you!
Apply for the HELOC.
Be ready to provide income verification, credit history, and details about your home. Approval depends on your equity, credit score, and debt-to-income ratio.
Use HELOC funds to pay off high-interest debts.
Once approved, draw from your HELOC to pay off credit cards, personal loans, or other balances in full. This simplifies your repayment into one account, the HELOC balance!
Make disciplined payments.
The key to successful consolidation is avoiding new debt. Stick to paying down the HELOC balance and avoid running up your credit cards again.
Risks to Consider
While a HELOC can be a powerful tool, it’s not without risk:
- Your home is collateral. Missing payments could put you at risk of foreclosure.
- Variable rates. Many HELOCs have adjustable rates, which means your rate could change in the future. Although, HELOC rates still tend to be much better than credit card rates regardless of variable rates.
- Temptation to overspend. A line of credit can feel like free money, discipline is essential!
Is a HELOC Right for You?
A HELOC makes the most sense if you have significant equity in your home, stable income, and the commitment to pay down debt without accumulating more. If used wisely, it can help you save on interest, simplify repayment, and regain financial control.
Turn home equity into opportunity.
Whether it's renovating your home, upgrading to your dream backyard oasis, or finally taking that long-awaited vacation, our HELOC provides the flexibility and convenience you need. Apply online or call us at 303.427.5005.
- HELOCs as low as 7.00% APR*
- $350 in closing fees waived
- $200 in cash
*APR = Annual Percentage Rate. Rate effective as of 07/21/2025. Not all will qualify for the lowest rate. Rates are variable with a maximum rate of 18.00% APR. Fees for appraisal, title insurance, flood hazard determination, and recording charges may apply. Property insurance is required. The estimated aggregate of credit union and third-party fees range from $115 to $1,900. Closing costs vary and average $301.
