What Is A HELOC? HELOC is the abbreviation for a home equity line of credit. It is a loan set up where you receive a line of credit from the lender. The loan amount is based on the value of the home and you use your home as a collateral for the same. The amount of equity in your home will help you determine the amount of loan you are eligible for. Once you get the loan, you will receive a card or a check to the account and you can use the same to draw from the line of credit as and when you need to use it. There will be a maximum withdrawal limit on the same. You can use HELOC for the purpose of consolidation of debt because it is available at an interest rate, which is lower than that of a credit card. How does HELOC work? HELOC is a loan that will consider your credit history and the value of your home before giving you a line of credit. There are different features of the loan you need to understand before you apply for one, they are: Even if you are approved for the line of credit, the monthly payment will depend on the amount drawn by you.