If you have high-interest debt, you could consider paying it off with your home’s equity. One way to do this is with a home equity line of credit, or HELOC.
Since HELOCs are secured by your home, you can usually get lower interest rates than with credit cards or personal loans. This can make debt consolidation appealing for borrowers struggling to make progress on high-interest debt.
However, HELOCs come with a tradeoff: lower interest rates in exchange for higher risk. If you can’t keep up with monthly payments, the lender can foreclose on your home. Before using home equity to consolidate debt, it’s important to understand both the potential savings and the risks involved.
Understanding how HELOCs work
HELOCs work a little differently than other kinds of loans, so carefully review the terms of any lender quotes so you know what to expect. Lenders set their own guidelines when designing these products, but most HELOC options will adhere to certain industry standards.
For instance, most HELOCs have a 10-year draw period and a 20-year repayment period. During the draw period, you’re usually only required to pay interest on funds you’ve used. After the draw period is over, you can’t borrow any more, and you have to pay both interest and principal for the remainder of the term.
A HELOC is also a type of second mortgage, and you should consider how it will impact your timeline for owning your home outright. For example, if you’ve got 15 years left on your primary mortgage when you decide to get a 30-year HELOC, you could extend the amount of time you’ll be paying a home loan.
HELOCs usually have variable interest rates, which can move up or down with the market. On a 30-year time horizon, this is unpredictable. Some lenders offer a fixed rate on some (or all) of the line balance.
Knowing when your debt has become a problem
If you’ve found your debt ballooning and are looking for a solution, you’re not alone. Debt has become increasingly normal for Americans in the years since the pandemic, says Elizabeth Renter, NerdWallet senior economist.
“It’s one thing to take on this debt, but another to stay on top of it, and delinquency levels are rising,” Renter says. “Many households are struggling to stay ahead of their debt payments, and interest rates on credit cards are at historic highs, making it even more difficult.”
According to Regina McCann Hess, CFP, president of Forge Wealth Management in Malvern, Pennsylvania, the key to knowing if your debt is growing to an overwhelming degree is whether you’re able to make real progress with your monthly payments.
“Where I see people making mistakes is that they have debt and tell themselves that they’re paying it off, but if they’re paying off $800 a month and charging $1,000 a month, they’re not actually making headway,” McCann Hess says.
If your current interest rates are too high for you to meaningfully lower your debt each month, restructuring with a HELOC might be a smart move — provided that you’re also in a position to change your spending habits.
Changing the cycle of spending and debt
“You don't want to use it as a license to spend,” says John Jones, CFP, at Heritage Financial in Newberry, Florida. “You want to use it as an opportunity to rebalance your financial life.”
It’s important to stay disciplined with spending and debt so that you don’t fall back into a cycle of overspending, Jones says. The context of every individual’s situation is different, and you may want to talk with a financial planner or advisor to help design a plan for paying off your debt with a HELOC.
“A lower interest rate on your debt may make it marginally easier to manage, but trading one or multiple debt types for another should only come after serious consideration,” Renter says.
Deciding if your debt is the right fit
Before using a HELOC for debt consolidation, consider what kind of debt you have. For example, credit cards and other kinds of high-interest unsecured debt can be good candidates for consolidating.
Jones has seen clients dramatically reduce their average interest rate by getting a HELOC to consolidate multiple lines of outstanding high-interest debt, and he often recommends HELOCs as a valuable financial tool.
To understand why borrowers consider consolidating, it helps to look at the numbers. NerdWallet’s 2025 analysis found that households with credit card debt owed an average of $11,413 as of September 2025. The average credit card APR was 22.3% in November 2025, so at that rate, a borrower would be paying about $211 in interest each month.
Comparatively, the average HELOC rate in May 2026 was 7.5%, as reported by Experian. A HELOC with a balance of $11,413 would have a minimum monthly payment of about $70 during the draw period and $90 during the repayment period.
Other kinds of debt may not make as much sense for consolidation with a HELOC. For example, even if you feel overwhelmed by student loan debt, a HELOC might not be able to help you get a lower interest rate. HELOC rates are typically higher than student loan rates.
Choosing a HELOC lender for debt consolidation
If you do choose to use a HELOC to consolidate outstanding debt, you’ll want to find a lender that gives you the best combination of low rates and fees. Seek out lenders that offer rate discounts (some offer this for enrolling in autopay, for example) and no origination or annual fees. Rule out any lenders that have a minimum initial draw requirement higher than your current debt balance.
If a lender offers a low introductory rate, you could take advantage of that by front-loading principal payments. Borrowers who are wary of variable interest rates can also identify lenders that offer a fixed-rate option.
HELOCs may differ from lender to lender. You can benefit from shopping around to compare offers.
What you can gain from consolidating your debt
If your credit score has suffered because of your debt situation, you might be offered a higher-than-average HELOC interest rate.
This is still likely going to be lower than credit card rates, and your credit score can grow over time by making regular monthly payments that lower your principal balance.
In addition to getting to a better financial position, there are emotional benefits to getting out of debt.
“It’s empowering,” McCann Hess says. Gaining control of your debt and your financial future can be a source of confidence and pride.
For disciplined borrowers who avoid taking on too much additional debt, a HELOC can be a tool for financial leverage. By taking advantage of a lower interest rate and making consistent monthly payments, you can tackle your bills and get them to a more manageable place.
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