Can You Lock in a HELOC Rate?

Most HELOCs have a variable interest rate, which can change throughout the repayment term based on market conditions. Rather than be at the mercy of fluctuating rates, some lenders let you lock in part of your HELOC at a fixed rate.

Let’s discuss how to lock in a HELOC rate and examine lenders that offer this benefit.

How to lock your rate on an existing HELOC

Your first step is to check your lender’s website or contact a customer support representative to see if this feature is available. In most cases, lenders that offer this feature let borrowers lock a portion of their HELOC balance three to five times.

Here’s an illustration explaining how fixed-rate options work on variable-rate HELOCs.

How to lock your rate on a new HELOC

Some lenders allow you to prequalify for a HELOC. This gives the lender a limited view of your credit history after a “soft” credit check (which doesn’t affect your credit score) to determine whether you qualify, how much you can borrow, and your expected interest rate.

While this is an excellent feature most lenders now offer, it isn’t a formal application, so the terms are subject to change depending on your home appraisal, a hard credit check, and the underwriting process.

Because of this, you can’t technically lock in a prequalified HELOC rate until a full application is submitted and reviewed. However, these soft credit checks are the best way to understand your potential offer before impacting your credit score.

Lenders that let you lock in HELOC rates

The lenders below offer several options for locking a full or partial fixed rate on a HELOC. You can also prequalify with a soft credit check.

Figure: Best for fixed-rate HELOCs

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Rates are always fixed

• Borrow up to $400,000
• Funding in as little as 5 days
• See rates without impacting your credit

Figure offers HELOCs of up to $400,000 with an online application and funding in as little as five days. Figure HELOCs are subject to an origination fee of up to 4.99% on the initial draw.

With Figure, you lock in rates when you draw funds. They’re based on your creditworthiness and the origination fee you choose to pay. You can redraw up to 100% of your HELOC limit after repaying the debt at then-current interest rates.

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Hitch: Best for converting to fixed-rate loans

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Lock the rate for part of your HELOC

• Only available in Colorado, Florida, Maryland, Oregon, Utah, and the District of Columbia
• Access up to 95% of your home’s equity
• Check your rate without impacting your credit

Hitch is a new lender that is only available in five states, plus D.C. All of its HELOCs come with variable rates, but portions of your balance can be converted into a fixed-rate loan.

After you’ve drawn funds, you can submit a request to lock in your rate, and the funds you’ve drawn will be converted into a fixed-rate loan until fully paid off. There are no details on how many times you can do this.

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Bethpage FCU: Best fixed introductory rate

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Fixed introductory rate, then variable

• VantageScores of 720 and up can receive a fixed rate for 12 months
• Variable-rate balances can be converted into three fixed-rate loan balances at one time
• No origination, appraisal, or closing costs

Bethpage borrowers can withdraw as much as $1 million of their home’s equity with a HELOC with no origination fees or closing costs. 

These HELOCs offer three options:

1. A fixed-rate HELOC loan option enables you to lock in the rate on up to three separate draws of $10,000 or more.
2. An introductory fixed rate.
3. A variable rate.

You can also consider refinancing your variable-rate HELOC debt into a fixed-rate product later with one of Bethpage’s fixed-rate home equity loans.

How does the fixed rate on a HELOC work?

There are two types of fixed rates for HELOCs.

Fixed-rate HELOC

If you have a fixed-rate HELOC, your rate will remain the same. So if you have a 10-year draw, the money you borrow in month one is subject to the same interest rate as the money you pull out in month 120—and in the repayment period. Whether you withdraw funds once or five times, the HELOC interest rate is the same.

Variable-rate HELOC

If you have a variable-rate HELOC that allows you to lock rates at defined points, you may find that some draws are subject to a different rate than others.

For example, if you withdraw funds at two different times, and your variable rate changes between the first and second draw, you’ll see different interest charges on these debts until you pay them.

Your HELOC balance might look like this:

• $20,000 at 6.5% APR
• $15,000 at 8.25% APR

Important note: The interest rate you lock in may not be the current rate. It could be the current rate plus a certain percentage based on where you are in the draw period. 

Here’s an example: 

• Months 1 – 24: current HELOC APR (6.50%)
• Months 25 – 84: current HELOC APR + 0.25% (6.75%)
• Months 85 – 120: current HELOC APR + 0.50% (7.00%)

So let’s say you’re in month 26. Because rates appear to be rising, you want to withdraw funds while the current HELOC rate is 6.5% APR. You can do that, but your lender will lock you in at 6.75% APR instead of today’s 6.5%. 

What are typical fixed rates for HELOCs?

Interest rates on HELOCs, and all consumer debt products, have a tendency to make regular shifts, so the rates you see today could well change tomorrow. They could look much different in six months or a year.

At the time you apply, fixed rates tend to be higher than the introductory rates on variable-rate products (but not necessarily for the full term). This is true for HELOCs as well as home equity loans, personal loans, and auto loans.

As the borrower, you have two choices:

1. Lock in a safe, predictable fixed rate, but risk market rates falling.
2. Opt for a variable rate that’s more competitive today but may rise or fall in the future.

For qualified borrowers, fixed HELOC interest rates tend to range from the single digits to the low teens. However, this is subject to change based on creditworthiness, your home’s equity, location, and, of course, market conditions.

Can I choose between a fixed and variable rate for each withdrawal I make from my HELOC?

Lenders tend to offer HELOCs in one of two “flavors”: variable-rate products or a fixed interest rate for the life of the account. 

In most cases, you will need to commit to one when you take out your line of credit, and it will apply to all future withdrawals. HELOCs often come with variable rates.

But even if you take out a HELOC with a variable interest rate, you may have the option to lock in fixed rates as you go. With rate-locking, you can enjoy the benefit of a variable rate that might decrease while reserving the right to lock in lower rates on withdrawals before rates increase.

This feature isn’t available on all HELOCs. Be sure to speak with your lender to see what fixed- and variable-rate options it offers before you finalize the account. 

Do any other terms change if I convert my variable-rate HELOC to a fixed rate?

Over time, you might decide your variable-rate HELOC isn’t the right product for you, and you would prefer a fixed-rate line of credit instead.

In some cases, your current lender may be willing to convert the HELOC from variable rates to fixed. If it won’t allow for fixed-rate HELOCs or is unwilling to convert your account, you may need to see about refinancing your HELOC with another lender instead.

No matter which choice you make, expect your HELOC terms to change. 

This could mean:

• Your new fixed rate is higher than your current variable rate.
• New draw period or repayment period terms.
• Reduced credit line.
• Your lender may change your minimum withdrawal requirements.
• Additional closing costs or other fees.

If my current lender doesn’t let me lock in my rate, can I refinance with a new lender that will?

You’re unhappy with your existing variable-rate HELOC and would prefer a product with a fixed interest rate, but your lender won’t allow for a rate lock. What should you do?

Your options include the following:

• Apply to refinance your HELOC through another lender, which may offer better terms.
• Take out a fixed-rate home equity loan instead, and use the proceeds to pay off your HELOC balance.
• Opt for a cash-out refinance with a fixed rate, and satisfy your HELOC debt with those funds.
• Borrow an unsecured personal loan to effectively refinance the HELOC.

You may encounter fees with any of these choices. You might also find it more challenging to qualify for a new product with a new lender since your HELOC balance will now count against your debt-to-income ratio (DTI). 

If you plan to secure the new debt with your home’s remaining equity, note you may have a lower credit limit the second time because most banks lend according to your combined loan-to-value ratio (CLTV). 

This ratio accounts for your current home equity and all liens against your property, including your original mortgage, a second mortgage, and home equity loans or lines of credit. Most lenders limit their maximum CLTV to between 70% and 85%. So if you have a home valued at $400,000, and your lender’s maximum CLTV is 85%, your liens can add up to no more than $340,000.

If you owe $250,000 on your first mortgage and have a $70,000 HELOC balance, you might expect to tap into $20,000 in home equity based on the math in the following example:

$340,000 max CLTV – ($250,000 mortgage balance + $70,000 HELOC balance) = $20,000 equity remaining

However, you may not meet the lender’s minimum HELOC withdrawal or home equity loan requirement.

Should I lock in my HELOC rate?

Locking in your HELOC’s interest rate might not be the best option in some instances. The most significant disadvantage can be that rates drop afterward.

So if you lock in a competitive rate today, you could save yourself from higher rates in the future. But if rates drop, you miss out on a lower rate. 

You’ll also find that with most lenders, fixed interest rates are higher than variable rates at the start of the loan. Because of the added risk a borrower takes on with a variable rate, lenders tend to offer more competitive introductory rates.

Check out our article if you want to know more about how often the APR on a HELOC can change before you decide.