Can you get a HELOC with a different bank?

If you’re having trouble making ends meet, or you want to be prepared for possible future cash needs, you might consider opening one Home Equity Line of Credit (HELOC).

While you don’t necessarily want to replace one financial challenge with another — for example, taking out more debt with a HELOC for unexpected expenses — sometimes HELOCs give homeowners the flexibility to improve their overall financial situation.

For example, if you have a credit card balance from past spending that’s gotten out of control, you may have trouble paying it off, especially since interest rates have recently gone up. So, the opening A HELOC That can give you access to cash to pay off credit card debt. And keeping a line of credit open can help if you want more access to cash down the road, eg Renovate the house.

The process of applying for a HELOC is relatively simple and you will usually have several options to choose from. If you think you might benefit from a HELOC, start exploring your rates and options here now.

Can you get a HELOC with a different bank?

Should you open a HELOC with the same bank or lender that you got your mortgage from? Usually, the answer is no.

“Your HELOC provider can be anyone,” unless your mortgage provider has unusual loan terms, says John Bodan, president and founder of The Perpetual Financial Group and strategic financing advisor to Real Estate Bees. Or, it’s possible that another lender won’t be willing to act as your HELOC provider, but these are unusual circumstances.

Assuming you can find another lender who is willing to work with you, you are usually able to get one lender for your mortgage and a different lender for your HELOC. This doesn’t mean you have to separate these areas, but you may be able to find better offers by doing so.

Check your HELOC offers here to learn more.

Why would you want to use a different bank for a HELOC?

Working with the same bank may be more convenient, but you may also find that other lending institutions offer more competitive HELOC terms. For example, if you can get a lower interest rate on a HELOC with a bank that isn’t your mortgage lender, you can save money while financing the HELOC.

“Really, it comes down to terms,” ​​says Bodan. “HELOC [rates] Can vary significantly from place to place, so make sure you’re getting a good deal on it.”

It is also possible that your current bank has tightened its credit provision, or perhaps your credit terms have changed. So, maybe you’ve qualified for a mortgage with a bank in the past but you don’t qualify for additional funding through them. In that case, your only option to get a HELOC may be to use a different bank or other type of lending institution.

“Your credit score is very important,” says Bodan. “Most places won’t touch a borrower below 680.”

How will a HELOC work with a different bank?

If you got a HELOC from your existing bank, the process will likely be more streamlined, since you already have a relationship with them. But for the most part, it works the same way.

“It will really be the same,” Bodan said. “You have to do a full loan application, pull your credit, verify employment/income, and do some sort of home appraisal – even if it’s an electronic or desk appraisal that doesn’t require an appraiser to physically see you.”

If you’re approved, your lender will open a HELOC and set up your access to these funds, such as by giving you a HELOC card, which can work like a regular debit card. From there, you can set up repayments, such as by initiating automatic payments online, just as you would for other types of loans.

Instead of having one lender for your mortgage and HELOC, you’ll have two. You may already be used to similar setups, such as making a mortgage payment to one bank and a car loan payment to another lender.

Bottom line

Overall, getting a HELOC from your current mortgage lender as well as another lending institution doesn’t have to be too complicated. While sometimes working with different lenders can be a little less convenient, the general experience is often the same. Also, if you find a lender that offers better HELOC terms than your current bank, it may be worth any extra steps you have to take.

That’s why it often makes sense to shop around to see what different lenders offer. You may find that your current bank ends up being the best overall option for handling both your mortgage and HELOC, or you may find that you can get a better deal by working with two different lending institutions.

You may even find other options, such as a Home equity loan, ended up being a good fit. Still, borrowing against your home equity is an important decision that comes with risks. Take your time exploring different routes to see what makes sense for your situation. Use the table below to explore some local options now