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Homeowners tackling large renovation or remodeling projects often turn to Home Equity Lines of Credit (HELOCs) as a flexible and affordable financing solution. But choosing the right HELOC advance structure—revolving vs. one-time (or fixed)—can make a significant difference in both budgeting and long-term financial planning.
This article explores the differences between these two HELOC options, helping you determine the best fit for your next big home project.
What Is a HELOC Advance?
A HELOC allows homeowners to borrow against the equity in their home, usually at a variable interest rate. Advances are the method by which funds are drawn from this line of credit. There are two primary types:
- Revolving Advance: You can borrow, repay, and borrow again—like a credit card.
- One-Time (Fixed) Advance: You borrow a lump sum once, often at a fixed rate.
Understanding which structure is best for you depends on your project type, spending timeline, and budgeting preferences.
Revolving HELOC Advances: Flexibility First
Key Features
- Draw and repay multiple times
- Interest-only payments during the draw period
- Ideal for long or unpredictable project timelines
Pros
- Highly flexible: Great for projects with evolving scopes, like home additions or phased renovations.
- Lower initial payments: Interest-only draw period allows you to manage cash flow.
- Ongoing access: Helps cover surprise costs or upgrades without reapplying for credit.
Cons
- Variable interest rates: Payments may increase unexpectedly.
- Temptation to overspend: Flexibility can lead to less disciplined budgeting.
One-Time HELOC Advances: Stability and Predictability
Key Features
- Single disbursement of funds
- Often fixed interest rate
- Locked-in repayment schedule
Pros
- Predictable payments: Fixed rates and set repayment terms simplify financial planning.
- Ideal for contractors: Helps streamline payments for fixed-cost work like roofing or kitchen remodels.
- No re-qualification: Secures a rate upfront with no additional approvals.
Cons
- No redraws: Once funds are used, you’ll need another loan or line for additional work.
- Less flexibility: Doesn’t adapt well to projects with fluctuating budgets or timelines.
Which HELOC Structure Is Best for Large Projects?
When to Choose a Revolving HELOC Advance
- You’re managing a multi-phase or open-ended renovation.
- You anticipate unexpected costs along the way.
- You prefer to access funds gradually as invoices come in.
When to Choose a One-Time HELOC Advance
- Your project has a fixed budget and clear scope.
- You want the certainty of fixed payments.
- You’re working with contractors requiring upfront lump payments.
FAQs About HELOC Advances
What happens if I exceed my credit limit with a revolving HELOC?
Your lender will usually deny the transaction or may charge over-limit fees. Always monitor your usage closely.
Can I switch from a revolving to a fixed advance later?
Some HELOCs offer conversion options, allowing you to lock in a fixed rate on part of your balance.
Which advance option typically has a lower interest rate?
One-time advances often offer lower, fixed rates, while revolving advances fluctuate with the market.
Read Next
Unlock Your Home Equity with Figure
- Approval in 5 minutes. Funding in as few as 5 days
- Borrow $20K-$400K
- Consolidate debt or finance home projects
- Fastest way to turn home equity into cash
- 100% online application
Our advice is based on experience in the mortgage industry and we are dedicated to helping you achieve your goal of owning a home. We may receive compensation from partner banks when you view mortgage rates listed on our website.
