A home equity line of credit is a form of revolving credit in which your home serves as collateral. This loan creates a lien against your house.

You can use a home equity line of credit for large purchase items, such as home improvements, education or medical bills.

Typically, you may draw against your full line of credit at any time during the loan period. This provides you with increased purchasing power at lower interest rates than most other alternative forms of credit.

Most of the costs you will confront when establishing a home equity line of credit are similar to those you paid when you first bought your home.

This may include property appraisals, application fees and points. In addition, you will be paying closing costs and titling fees.

Before you borrow, it is important to consider the differences between a home equity line of credit and a home equity loan.

When you compare the two, it is important to realize that the annual percentage rates (APRs) for a loan includes interest rates plus points and other finance charges.

The APR for a line of credit is based solely on the periodic interest rate. Do the math to figure out which makes the most sense for you.

Home equity lines are much simpler than a first mortgage. Often, there are no closing costs, or the closing costs are minimal. So, you'll not only have money available at a low interest rate, but you don't even have to pay out of pocket to get it!
If you find a no closing cost home equity line with a low interest rate, you should act on it even if you don't have an immediate need for it.

Avoid using unsecured personal loans if you can put up some security for your borrowings. This will get you a lower interest rate. A home equity loan, or redraw of extra repayments, allowing you to borrow against the equity built up in your own home or an investment property, is the best option of all

When shopping around for a loan, consider community banks, credit unions and other smaller financial institutions which might be more approachable, and offer lower interest too.

When offered loan, always be sure you know what interest rate applies. Lenders often ‘sell’ you their finance packages by quoting the monthly repayments only. This may disguise a high interest rate. Be Smart!

1. No application fee
2. No appraisal or closing costs
3. No account maintenance or check-writing fees
4. Variable APR equal to or near the prime rate (adjusted quarterly)
5. Periodic cap on interest rate changes
6. Lifetime cap on rate increases
7. Ability to convert to a fixed rate loan
8. Interest-only payments allowed
9. Unrestricted ability to repay principal without penalty
1. No "non-usage" fees

The HELOC market is very competitive. Some lenders may charge a fee to help cover their costs of processing your HELOC application and to ensure applications are received only from seriously interested homeowners. If your lender assesses an application fee, be certain that it is refundable at closing. Otherwise, look elsewhere for your HELOC.

The market value of your property is key to determining the amount of your credit line. Some lenders are willing to use publicly available tax assessment data in lieu of formal appraisals. Others may absorb appraisal costs to attract customers. Either way, there are enough no-cost options available that you should not have to settle for HELOC lender that charges appraisal costs or any other closing costs.

The reason for taking these loans may differ but the goal of taking these loans is just to fulfill the basic needs of a common man. Depending on one’s affordability one can choose an EMI (equated monthly installment).EMI consists of a combination of interest and principal and is calculated on the following formula

EMI Formula : l x r [(1+r)n /(1+r)n-1 ] x 1/12
l = loan amount
r = rate of interest
n = term of the loan
Apart from this there are automated EMI calculators available online.