Can a bank make you convert your Home equity line of credit (HELOC) to a loan?

  • 2
    Assuming that you mean "home equity line of credit"? That starts as a loan, so I'm not sure what you mean by convert it to a loan. en.wikipedia.org/wiki/Home_equity_line_of_credit
    – user32479
    Oct 2, 2015 at 21:30
  • 3
    @Brick is right; thd question as you've posed it doesn't quite make sense. Please clarify -- what kind of loan are you afraid it would turn into, how would that differ from what it is now, and why do you think this risk exists?
    – keshlam
    Oct 2, 2015 at 22:55

1 Answer 1


In the last housing crisis lenders modified home equity lines of credit.

Normally a person is approved to a maximum amount. During the draw period they can borrow up to that maximum amount, they then start payments under a specific formula. If they pay it off before the draw period ends or even if they partially pay it off, they can borrow more money up to the maximum of the line of credit. Rinse and repeat. After the draw period ends it is treated as a loan,and has a specific repayment schedule.

During the crisis the lenders closed lines of credit that were not being used. For those with outstanding balances, but still withing the draw period saw their maximum drop to the current balance. That caused problems for people who hoped that they could use the equity in their home to cover them in a crisis. They had no reason to actually borrow unless they were desperate, or they needed the funds for a short term: they lost their job, found a new one, but had a small gap between paychecks. They lost that safety net just when they felt most vulnerable.

You have to read all the paperwork to see what they can do, and how much notice you would have.


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