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Weighing the Benefits of a Home Equity Line of Credit vs. Personal Loan

Personal Loan

  • Does not require collateral.
  • Funds are received in one lump sum.
  • Predictable monthly payments.
  • No application fee*.
  • Discount for automatic payment from a Santander account*.
  • Interest rates are fixed for the life of the loan.
  • Maximum loan amount based on credit history.
  • No tax benefits.

Click here to learn more about Personal Loans

*At Santander Bank


  • Requires home as collateral.
  • Use and re-use your approved HELOC as needed during the draw period (it’s more like a credit card).
  • Discount for automatic payments from a Santander account*.
  • Interest rates may vary over the life of the loan.
  • Maximum loan amount based on your home equity.
  • Tax benefit may be available if you use the HELOC for home improvements1.
  • Low monthly payment with the option to have Interest Only or Principal and Interest Payments.

Click here to learn more about HELOCs

How can I use a HELOC vs. personal loan?

If you're a homeowner with very good credit, you may wish to make your decision based upon how you will spend the funds. With a HELOC, you may receive a tax benefit for using the money for home improvements1. A personal loan for home improvements offers no similar benefit.

Aside from home improvements, many people choose to get personal loans for large-scale expenses such as weddings, home or car repairs, or debt consolidation.

Generally, the amount of money you can get with a HELOC is higher than a personal loan. This is because HELOCs, on average, are close to 70% or more of the value of your home. Personal loans are unsecured, and lenders typically offer them in lower amounts. If you need $5,000 or $10,000 for dental work or loan consolidation, a personal loan is likely more appropriate due to the lower amount needed. For larger expenses, it may be worth considering a HELOC. However, the amount that you’re able to get from a personal loan or from a HELOC will vary based on your particular financial profile.
Other factors to consider: HELOC vs. personal loan

If you have a project requiring variable and ongoing amounts of money, a HELOC could be a better option for you. Anything involving estimates, such as home improvements, might make a HELOC appropriate for your situation. HELOCs are built for flexibility; you have a maximum credit limit you can borrow from as long as you continue to pay it down. Generally, HELOCs last for ten years, so you can pay them down then use them again without a reapplication process.

For families with expenses, HELOCs are often a smarter option. If you have a large family capable of generating unpredictable expenses, it’s not a bad idea to have a HELOC ready. If your family is smaller or you are a single home owner or a renter, you may have more predictable expenses (as well as smaller ones), often making a personal loan the more viable choice. Deciding between a HELOC vs. personal loan is not always easy and relies on a variety of factors, but at Santander, we’re ready to help you with that borrowing decision.

Apply for a personal loan at Santander, pursue a HELOC, or contact a Customer Service Center Advisor today to start a conversation about lending options at 877-768-2265 from 6 a.m. to 10 p.m. ET, seven days a week. Please note that this information is intended for Santander customers in the United States; different rules and regulations apply to our customers outside of the United States.

1 Check with your tax advisor for the specific tax benefits possible for your situation.
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