How Long Are Home Equity Loan Terms? Explore Repayment Options
A home equity loan lets you borrow a lump sum of money and pay it back over a five- to 30-year term.
A 30-year loan produces the lowest monthly payment, but typically costs substantially more in total interest than a 10- or 15-year loan.
Turning home equity into spendable funds can be a good choice if you need to consolidate high-interest debt, cover home improvements or invest in higher education. However, it’s important to first understand how repayment works and whether it fits into your financial plan.
How long are home equity loans likely to last?
Home equity loan terms usually start at five years, but can be stretched to between 10 and 30 years, depending on your lender.
Typically, the longer your loan term, the more affordable your monthly payments will be. On the other hand, a shorter loan term usually comes with higher monthly payments.
You can use LendingTree’s monthly payment estimator below to see how home equity loan payments and total interest charges change with different loan terms.
Which home equity loan terms should you consider?
The best home equity loan term for you will usually depend on how much you can afford to pay monthly. Let’s compare the home equity loan rates and monthly payments on a $115,000 balance with 10-, 15-, 20- and 30-year repayment terms.
| 10-year home equity loan | 15-year home equity loan | 20-year home equity loan | 30-year home equity loan | |
|---|---|---|---|---|
| Interest rate
Interest rates are for illustrative purposes only.
| 8.97% | 8.42% | 8.84% | 8.52% |
| Monthly payment | $1,455 | $1,127 | $1,023 | $886 |
| Total interest paid | $59,589 | $87,872 | $130,49 | $203,917 |
| Total cost | $174,589 | $202,872 | $245,491 | $318,917 |
Takeaway: Even though a 30-year loan produces the lowest monthly payment, it typically costs substantially more in total interest than a 10- or 15-year loan.
How to choose the right home equity loan term for you
Choose a shorter term (five to 15 years) if:
- You want the lowest total loan costs. Shorter-term loans typically offer lower interest rates. Plus, you’ll pay significantly less interest if you minimize the number of years you’re paying interest.
- You want to consolidate debt. A shorter term can help you eliminate your debt faster than your current payment schedule.
- You want to do home improvementsthat have an expected lifespan of five to 15 years. A shorter loan term ensures you won’t be stuck paying off an HVAC system or roof after it’s become outdated or is no longer functioning.
- You’re nearing retirement. If you’re five to 15 years from retirement, eliminating home equity loan debt before your income drops can help you enter retirement with peace of mind and more financial flexibility.
Choose a longer term (20 to 30 years) if:
- You want a low monthly payment. If you’re on a tight budget, a longer loan term gives you the lowest minimum payment.
- You need a large loan amount. At the higher end of large loan amounts, a longer term may be necessary to keep your payments reasonable.
- You want to do home improvementsthat have an expected lifespan of 20 to 30 years. Improvements with long lifespans give you plenty of time to pay off your loan.
- You’re buying an investment property or second home. If you use home equity to make the down payment, it makes sense to choose a longer loan term as long as you’re planning to own the property long term.
Home equity loan terms vs. HELOC terms
A home equity line of credit (HELOC) usually lasts anywhere from five to 30 years, just like home equity loans.
However, a HELOC is an open credit line that you can use as needed, not a lump sum. Just like with a credit card, you’ll make payments based on what you borrow, plus the interest charged on the balance you carry.
As long as you have access to the credit line, it can be used, repaid and used again. But once your “draw period” ends, you must repay your credit line according to your loan terms. This makes a HELOC a good choice if you’re not sure how much money you’ll need, or if you plan to make many purchases over time.
Read more about how home equity loans and HELOCs compare.
Should you consider a cash-out refinance instead?
A cash-out refinance could be a good alternative if you planned on getting a home equity loan or HELOC with a longer loan term.
Cash-out refinance repayment typically lasts 15 to 30 years. This is on par with longer-term HELOCs and home equity loans, but may not suit your needs if you need a five- or 10-year repayment period.
A cash-out refinance is a mortgage loan that helps you tap your home equity. In this case, you’ll take out a new first mortgage for more than you currently owe and receive the difference in cash. You can use the money from your cash-out refi for virtually any purpose.
Cash-out refinance rates are usually lower than rates on home equity loans and HELOCs.
Frequently asked questions
It typically takes two to six weeks to apply for and receive the funds from a home equity loan. This is similar to how long it takes to get a HELOC, while it may take as many as six weeks to get a cash-out refinance.
Yes. Most home equity loans can be paid off early without extending the loan term. However, some lenders charge prepayment penalties, so check your loan agreement before making extra payments.
You generally can’t change your repayment term after closing. If you want a shorter or longer repayment period, you’ll usually need to refinance your home equity loan.
Since HELOCs typically have lower interest rates — and you’ll only pay interest on the funds you withdraw rather than the full credit line amount — they’re often the cheapest way to access home equity. That said, you’ll ultimately need to run the numbers on your specific situation, using actual loan offers you’ve received, to truly understand what’s best for you.
Compare Home Equity Offers