Can you take equity out of your home without refinancing? You can. In fact, several financing options exist that let you tap into your home’s value while keeping your existing mortgage and its interest rate and terms right where they are.
Whether you need funds for home improvements, medical bills, major purchases, or debt consolidation, borrowing from your home equity can be a powerful financial tool. But if your current mortgage has a low fixed rate, you may not want to refinance, especially with today’s higher interest rates.
The following alternatives let you access your home equity while keeping your original loan intact. Our guide walks you through the most common strategies, including their benefits, risks, and what it takes to qualify.
Why Avoid a Cash-Out Home Refinance?
A cash-out refinance replaces your current mortgage with a new, larger one in exchange for a lump sum to spend, pretty much however you like. The lender pays off your old mortgage, gives you the difference in cash, and you repay the new loan over time. While this can be a convenient way to access your home’s equity, it has downsides.
Refinancing resets your mortgage term, often back to 30 years. It also includes closing costs, which can eat into the money you receive to the tune of 2% to 5% of the total. Worse, if your current mortgage has a low fixed interest rate, refinancing could mean giving up one of the most significant money-saving factors in your budget, only to take on higher interest rates now.
Additionally, if your financial situation has changed since you acquired your mortgage, you could even face a higher interest rate, stricter credit requirements, or difficulty qualifying at all.
That’s why many homeowners are looking for ways to tap into home equity without refinancing.
Key reasons to find a cash-out refi alternative
- Preserve your low rates
- Avoid significant refi fees
- Maintain your mortgage payoff date
- Qualify more easily for other options
- Home Refinancing Options Comparison
| Option | Interest Rate | Monthly Payments | Closing Costs | Necessary Equity in Home |
| Home Equity Loan | Fixed | Yes | Moderate | 15–20%+ |
| HELOC | Variable (with fixed options) | Yes (interest-only possible) | Low to moderate | 15–20%+ |
| Home Equity Investment | None | No | Moderate to high | 20–30%+ |
| Personal Loan | Fixed | Yes | Low | None |
| Sale-Leaseback | None | Rent instead | Varies | High equity |
| Reverse Mortgage | Fixed or variable | No | High | Age 62+, equity required |
1. Home Equity Loan
A home equity loan is also known as a second mortgage. A home equity loan is a fixed loan secured by the value of your home. You borrow a lump sum upfront and repay it in equal monthly payments over a set loan term, usually 5 to 30 years.
This loan doesn’t replace your mortgage. Instead, it sits “behind” your existing mortgage, leaving it as it is. Many lenders allow you to borrow up to 80% to 85% of your home’s appraised value minus your remaining mortgage balance. This means you’ll need to leave behind 15% 20% of the equity in your original mortgage.
Home equity loans typically come with fixed interest rates, so your payment stays the same over the life of the loan. A standard comparison is home equity loans versus personal loans. Multiple borrowing options, including HELOCs, are available through LendingTree. Discover how to qualify without affecting your credit score in our Lendingtree Review.
Features
- Receive a lump sum up front
- Repay with monthly payments over a specific duration
- Lock in a fixed interest rate for predictable payments
Pros
- Predictable payments
- Excellent for large expenses (renovations, college tuition, high-interest debt)
- Lower rates than personal loans
- Keep your original mortgage and rate
- Interest payments are possibly tax-deductible
Cons
- Adds a second monthly payment
- Requires credit scores of 620+ and sufficient income
- Comes with closing costs (though usually lower than refinancing)
- Risk of foreclosure if you stop paying
2. Home Equity Line of Credit (HELOC)
A HELOC is a revolving credit line secured by your home’s equity. It works similarly to how a credit card does, but uses your house as collateral and offers a lower APR than cards.
You can borrow as needed during the draw period, which typically lasts between five and 10 years. This means that you can access your equity more than once during the draw period, provided there’s room under your borrowing limit or you’ve made sufficient payments to decrease the amount you owe below your spending cap. You then repay the loan throughout the repayment period, which typically lasts between 10 and 20 years.
Most HELOCs have variable interest rates, so your rate and payments can change with the market. However, many of the best HELOC providers offer fixed-rate options, making them far more user-friendly and predictable.
Like home equity loans, HELOCs usually allow borrowing up to between 80% and 85% of your home’s value, combined with your first mortgage, and require about 20% of its equity to remain intact. One significant benefit is that you’ll only pay interest on the amount you borrow, or draw, rather than on your entire borrowing limit.
Features
- Variable interest rates that fluctuate with the market (though fixed-rate options are becoming popular)
- Interest-only payment option during the draw period
- After the draw period, you begin repaying both principal and interest over a repayment period, usually between 10 and 20 years.
Pros
- Flexible borrowing over time
- Lower initial payments (interest-only during the draw period)
- Can be ideal for ongoing projects like phased home upgrades
- No impact on your existing mortgage
Cons
- Many HELOCs have variable interest rates
- Payments can spike when the draw period ends
- Still includes closing costs
- Home is at risk if you fall behind on payments
3. Home Equity Investment
A shared equity agreement, also called a home equity investment or HEI, is a contract in which you receive a lump-sum payment from an investor. In return, they claim a portion of your home’s future appreciation when you sell it, or after a defined period, typically between 10 and 30 years.
An HEI isn’t a loan. There are no monthly payments and no interest. Instead, the investor earns a return based on your home’s value sometime in the future.
The amount you can get typically equals between 5% and 20% of your home’s value and usually maxes out at a prescribed dollar amount. You generally need significant equity of at least 20% to 30% to qualify. However, because you’re not adding new debt, many customers qualify without income verification and credit scores as low as 500.
While HEIs can provide short-term liquidity, they require scrutiny before diving in. According to the Consumer Financial Protection Bureau, “Under many contracts, the settlement amount grows at a rate of 19.5–22% per year in the early years, which is substantially higher than interest rates on most home-secured credit…”
Pros
- No monthly payments or debt added to your budget
- Easy qualification requirements
- An option for homeowners who are asset-rich but cash-poor
- Doesn’t affect your existing mortgage
Cons
- You give up a portion of your home’s future value
- Can be more expensive than loans over time
- You must settle the agreement through a sale, refinance, or buyout
4. Personal Loan
While this guide focuses on accessing your home’s equity, homeowners often weigh their options and decide on simply taking out a personal loan instead. We include it here so you’ll have all of your options in front of you.
A personal loan is unsecured, meaning it doesn’t require the use of your home as collateral. It’s a good option for borrowers who don’t have much equity in their house, haven’t owned it for very long, or simply don’t want to risk losing their property if they fall behind on payments.
Consumers often use the best personal loans for debt consolidation, medical bills, or major purchases. Repayment terms and conditions vary, and multiple borrowing options are available through our featured partner, Credible.
Learn how to see if you qualify without affecting your credit score in our Credible review.
Pros
- Fast approval and funding (often within a few days)
- No home appraisal or equity required
- No foreclosure risk
Cons
- Higher interest rates than home equity products
- Shorter loan terms mean higher monthly payments
- Loan amounts are usually capped at $50k to $100k
5. Sale-Leaseback Agreement
A sale-leaseback allows you to sell your home to a third-party investor while continuing to live in it as a tenant. You receive cash for your home’s equity, pay off your existing mortgage, and then pay rent to stay in the home. The strategy can work as a temporary fix, but it’s rarely ideal as a primary solution.
Keep in mind that you don’t receive cash equal to the sale of the home, only the equity you have in it. You’re responsible for paying off your existing mortgage to access the funds.
Some programs let you buy the home back later, but this depends on the contract. While this method frees up your cash quickly, it should be viewed as a last resort.
Pros
- Accesses your home’s full equity instead of a percentage
- No loan approval, interest, or payments
- Can help homeowners in financial distress stay in place
Cons
- You lose ownership of your house
- Rent may increase over time
- Buying the home back can be difficult or expensive
- Not a good long-term solution for most homeowners
6. Reverse Mortgage
A reverse mortgage lets seniors age 62 and older borrow against their home equity with no monthly payments. The most common version, a Home Equity Conversion Mortgage (HECM), is insured by the federal government. You can take the funds as a lump sum, fixed monthly income, or a line of credit.
In the arrangement, instead of you paying the bank, the bank pays you against your equity without refinancing or selling the home. In return, the bank gets repaid, with interest, when you eventually sell the house or pass away. In the meantime, you remain the owner of the home, and you must continue to pay property taxes, insurance, and maintenance costs.
A legitimate reverse mortgage can be a strong option for seniors needing cash but wanting to stay in their homes. However, it’s crucial to understand the agreement terms and conditions before taking one on.
Pros
- No monthly repayment required
- Multiple disbursement options
- Remain in your home while accessing equity
- Can be a financial necessity in retirement
Cons
- High upfront fees and closing costs
- Loan balance grows over time (interest accrues)
- Less equity left for heirs
- You must stay current on taxes, insurance, and maintenance
How to Choose the Right Option
When considering how to borrow from your home equity, it’s important to consider all of the potential factors.
- How much equity you have in your home, and if you’ll need it later in life
- Your credit score and debt-to-income ratio
- The borrowing and repayment terms that best fit your budget and cash needs
- How long you plan to stay in the home
- The overall impact on your personal finances
For example:
- Use a home equity loan if you want predictable payments and a lump sum.
- Consider a HELOC for ongoing projects with flexible borrowing.
- Look at an HEI or reverse mortgage if you need cash but don’t want monthly payments.
- Use a personal loan if you want fast access with no property risk.
Always compare closing costs, interest rates, loan terms, and repayment obligations before making your decision.
