Managing Debt

How to use Home Equity Loans to pay off debt

Couple in their living room reviewing home equity loan options that can help them pay off their debt

When compared to balance transfers and personal loans, home equity loans may offer more borrowing power and competitive interest rates to help pay off debt. Home equity loans can also reduce monthly payments to make budgeting more affordable.

Benefits of using home equity to pay off high-interest debt

There are a number of benefits when using home equity to pay off high-interest debt.

High borrowing limits

If you have credit card debt, home equity loans can allow you to pay off your credit card debt all at once. Other options like balance transfers or personal loans will likely not give you as much borrowing power as your home’s equity.

Turn multiple credit card bills into one

If you use a home equity loan to consolidate your high-interest debt, you not only benefit from low interest rates, but you also remove the hassle of managing multiple credit card payments. This can help you more easily build a budget that suits your needs.

One consistent monthly payment

A key benefit of consolidating your high-interest credit card debt with a home equity loan is a fixed monthly payment. With a fixed rate from your home equity loan, you can pay off your credit cards and stop paying monthly credit card bills that continue to grow with interest. A fixed monthly payment also may allow you more easily plan your monthly budget.

Competitive interest rates

When compared with personal loans, home equity loans will typically provide a competitive (if not lower) rate. Even balance transfer cards that feature a 0% introductory APR will likely have an interest rate higher than most home equity loans when the promotional period ends, which could continue the cycle of credit card debt if you continue to keep a balance.

Longer loan terms mean lower monthly payments

With the flexibility of a Discover® Home Equity Loan, you can stretch your repayment terms over a longer period of time. With a longer term, you’ll find that monthly payments can be more affordable. To see how much your monthly credit card payments can be reduced with a home equity loan, use the debt consolidation calculator from Discover.

Risks of using home equity loans to pay off debt

While home equity loans are attractive options to consolidate significant credit card debt, they do come with some risks.

Risk of foreclosure

Any loan secured by your house puts your home at risk if you are unable to keep up with the monthly payments.

Longer terms

While the longer terms offered by home equity loans can help to stretch out debt payments, it also means you will likely pay more interest over the term of the loan.

Apply for a Discover Home Equity Loan to consolidate your debt

Using your home equity to secure a debt consolidation loan can help you pay off your existing credit card debt. Home equity loans feature high borrowing amounts, affordable monthly payments, and low interest rates when compared generally to personal loans or balance transfer cards.

To see how your home equity can help you to pay off your credit card debt, check out how much you may be able to borrow by using the loan amount calculator from Discover. Or if you’re ready to apply for a home equity loan to pay off debt, go ahead and start your Discover Home Equity Loan application today.

Find your low,
fixed rate

Use our Rate Calculator to find the rate and monthly payment that fits your budget.


Start your application online

or give us a call.

  • Weekdays 8am–Midnight ET
  • Weekends 10am–6pm ET

Start your application online or give us a call.

  • Weekdays 8am–Midnight ET
  • Weekends 10am–6pm ET