Home Equity Loans

When you take out a home equity loan, the interest rate is fixed, and you get the money in one lump sum. Your payments remain the same, and your rates won’t change over the term of the loan.

In contrast, a home equity line of credit (HELOC) typically has a variable interest rate—although SouthPoint offers the option to lock in at low fixed rate. Also, a HELOC allows you to withdraw funds when you need them, up to your credit limit, during the term of the loan.

Your loan-to-value ratio (LTV) is a percentage that indicates how much equity you have in your home. LTV is used to help determine rates for home equity loans and lines of credit.

To calculate your LTV, divide your mortgage balance by your property’s value like this:

Mortgage balance ÷ Property value = LTV

Home equity loans and lines of credit are secured against the value of your home, which means if you don’t make payments you can face serious consequences such as foreclosure and credit damage – the same as if you don’t make your mortgage payments.

However, when you borrow from your home equity responsibly, you can benefit from lower rates and more favorable terms than other loan types, in addition to potential tax advantages. Home equity can be a great way to fund big plans, especially home improvement projects that add value to your home and enhance your quality of life.

The bottom line is to approach home equity loans and lines as you would any other type of lending product: you should have a reason for borrowing and a plan for how you’ll pay it off.

With a home equity line of credit (HELOC) from SouthPoint, you can borrow up to 90% of your home’s equity as a line of credit. It’s very convenient, and it works similarly to a credit card. Borrow what you need, when you need it, until you reach your credit limit.

Withdrawing money during the draw period: This is the set amount of time (usually ten years) that you can borrow from your line of credit. You can extend your draw period, depending on your credit situation.

Repaying during the draw period: During the draw period, you can make the minimum payments on what you’ve borrowed, however we encourage paying more to reduce the balance.

Repayment period: Once the draw period ends, you won’t be able to withdraw funds. At this point, your loan enters the repayment period, when your payments will include both principal and interest. These payments will be a lot higher than the interest-only payments you made during the draw period.

There are several easy ways to access the funds in your line of credit.

• Transfer funds from your line of credit to another SouthPoint account directly from Online or Mobile Banking.
• Visit a branch to get a cashier’s check.