Hybrid Home Equity Line of Credit (HELOC)

A hybrid home equity loan, or fixed-rate HELOC, is a combination of the two products.

• A traditional home equity loan usually comes with a fixed annual percentage rate (APR) for the entire loan term.

• A traditional HELOC usually comes with a variable rate for the entire draw period and repayment term.

• A hybrid fixed-rate home equity loan or HELOC means you get a fixed rate for the first few years of your draw period and then you get a variable interest rate for the remainder.

Power Financial Credit Union lets you choose if you want to lock in a fixed rate for 3, 4, or 5 years. In this period, your rate will stay the same no matter what happens in the markets. This fixed-rate period offers a great opportunity to cross off your to-do list or pay down high-interest debt!

At the end of the fixed-rate period, your interest rate will begin going up and down with the markets. The variable rates you get will be based on a Prime Rate (such as the Federal Funds Rate) plus a margin determined by your lender.

The Prime Rate is how much financial institutions pay to borrow money from each other overnight so that they always have the legal amount of reserves in their accounts. Your lender then adds a small margin on top of that, which may be determined by your credit score and other factors.

You can borrow up to 70% of the market value of your home, after subtracting the amount you owe on your mortgage. The amount you can borrow also depends on other factors like your income and credit history. As you pay down your HELOC each month, you can use the funds over and over again throughout your 10-year draw period.

You can use your hybrid HELOC for just about anything! Common uses include:

• Home improvements, remodeling, and repairs 

• Vacations, weddings, and other family events

• Medical, dental, and vision expenses

• Unexpected expenses and emergency funds

• Debt consolidation of high-interest credit cards and loans

Note that the interest you pay on your HELOC may be tax-deductible when the funds are used for substantial home improvements. That's why it's a good idea to draw on separate amounts of funds for each purpose – and keep records. Check with your tax advisor for details!

A HELOC is more like a credit card in that you get a credit limit, and you can use as much or as little of the funds as you want at any time. You can choose how much to repay each month. When you pay your balance down, you can use the funds repeatedly until the end of your 10-year draw period.

At the end of your HELOC draw period, you get a 15-year repayment period to pay off your outstanding balance.

In contrast, a home equity loan is a fixed-rate loan like a personal loan. You get a lump sum payment and then make equal monthly payments through your loan term until the loan is paid off in full. 

Any of our existing credit union members are welcome to apply for a fhybrid home equity line of credit, or it takes just a few minutes to become a member.

Our membership consists of those who: live, work or go to school in Broward, Charlotte, Collier, Lee, Martin, Miami-Dade, Monroe, Palm Beach County, Hillsborough, Manatee, Pinellas, Sarasota, or St. Lucie counties.

Immediate family of all current members are also eligible to join.

We're also proud to offer membership to our Select Employee Groups. Members or employees of these organizations are welcome to join and apply for our quality products and services no matter where you are located:

• Ryder System, Inc. 
• FPL/NextEra Energy
• Sanitas
• Bonefish & Tarpon Trust