Alternatives to HELOC’s and Home Equity Loans

Have you decided against taking out a home equity loan or using a HELOC (home equity line of credit)? If so, you’re not alone. Many homeowners who want to borrow for non-house related projects discover that both of these common financing methods are unavailable to them. For example, not everyone has enough equity to qualify for a HELOC or any other equity-based borrowing, or credit score is a factor. What’s the solution? The good news is that there are many. Here’s a short summary of the most common alternatives to HELOC’s and similar loans.

Credit Cards

While it may not be the best or wisest option, but credit cards can act as a last resort for people who need some quick cash for an emergency. You need to be careful with interest rates. If you have several cards and need to make a cash advance, check contract details carefully to see which of your cards offers the least painful way to obtain money on short notice.

Personal Borrowing

Taking out a personal loan can be the most obvious, and often smartest, way to get the money you need for any important expenses under the sun. You don’t even need to be a homeowner. Personal loans are among the most flexible ways of obtaining the funds for a trip, an emergency medical expense, or to pay for a wedding. Of course, there are as many possible reasons as there are borrowers because this type of credit allows borrowers to do whatever they want with the money.


If you have enough savings to finance whatever your project is, you’re one of the lucky ones. Most people who are in search of additional sources of funding for a trip or emergency have already tapped out their savings accounts. But if you do have some available cash in one of these kinds of accounts, it’s possible to use it at no interest. In addition to that key advantage, remember that you can pay the money back to yourself on whatever timeline makes sense.

Life Insurance

Most life insurance policies contain borrowing provisions. Note that there are hundreds of variations on how much you can take out, what the conditions are, and how it affects your standing in relation to the insurance provisions. If you decide to use this method, speak with your insurance agent and be clear about all the details of the deal before committing to a transaction. Be sure to ask the agent about any tax implications on the deal and whether you’ll be able to repay within a specific time frame without incurring interest.

The Combo Method

In the real world, it’s quite common for people to use a combination of the above approaches. They might remove some cash from savings, borrow a few thousand dollars against a life policy, take out a personal loan, and as a last resort, use credit cards. It’s human nature that when there’s a lack of money, people somehow find a way of producing it if they have the means to do so. That typically means doing several things at once.