Your Home Equity Line of Credit: Exploring the Fixed-rate Option

You might already know that a home equity line of credit (HELOC) is a flexible way to borrow against the equity you’ve built up in your home. Most of the time, you’ll start out with a variable interest rate—one that can go up or down depending on the rate environment. However, you can also convert part or all of your outstanding balance on your variable-rate HELOC to a fixed-rate option.

What’s the fixed-rate option?

This option lets you convert a portion of your variable-rate HELOC balance to a fixed interest rate for a specified period of time. It’s particularly beneficial if you’re concerned about rising interest rates or like the stability of a set monthly payment.

Reasons to consider the fixed-rate option for your HELOC

• Predictability: Your monthly payments stay the same, making it easier to budget and plan for future expenses while protecting you from potential interest rate hikes.
• Flexibility: You can have up to five fixed-rate option conversions at any time, so you can individually manage portions of your balance. With no lifetime limit to how many conversions you can make, you’re able to adjust your financial strategy as needed.
• Agility: During the draw period, you can convert your balances to the fixed-rate option anytime—and back to a variable-line rate if circumstances change or if interest rates improve.
• Initial fee savings: When you open a new Associated Bank HELOC, we’ll waive the fixed-rate option conversion fee for the first 30 days.* If you’re a new borrower whose aim is to stabilize your payments right away, this can mean significant savings.
• A renewable credit source: As you make payments on your fixed-rate option balance, you rebuild your HELOC’s available draw balance. This means you’ll always have ongoing access to your line of credit during your draw period.
• A clearer financial future: Fixed payments and interest rates are designed so that you’ll have completely paid off the converted portion of your HELOC by the end of the term you select. This ensures that you know exactly when your balance will be paid off, making it easier to plan your finances.

Things to keep in mind

Although we do waive some fees (when opening a new HELOC, for example), there are other charges that apply for converting parts of your outstanding balance from variable to fixed-rate as well as minimum eligible draw amounts.  

HELOCs can be ideal for fixing up your home, consolidating debt or handling other significant expenses. However, it’s important to remember that, unlike unsecured debt such as credit cards, not keeping up with payments can put your home in jeopardy. Therefore, responsible use of your HELOC is critical. Be sure you have a solid plan for repayment.

Your banker or loan officer will be more than happy to explain the HELOC process and clarify any questions you might have.

*A $100 fixed-rate option fee applies to convert all or part of an outstanding balance from a variable rate to a fixed rate on your home equity line of credit. The fee is waived on fixed-rate option draws for new HELOCs for the first 30 days from closing and on new draws of $10,000 or greater after that. Minimum amount to convert to a fixed-rate option is $5,000. The fixed-rate option can primarily be done in person at an Associated Bank branch or by calling 1-866-LEND ABC (536-3222).