Home Equity Investment vs. HELOC: What you need to know before you tap your home’s value.

If you’re thinking about using your home’s equity to cover a major expense, invest in a project, or consolidate debt, you’ve probably come across two options: a Home Equity Line of Credit (HELOC) and a Home Equity Investment (HEI). On the surface, HEIs (also known as home equity agreement or home equity sharing) might sound appealing -no monthly payments, no interest- but the reality is far more complicated. Let’s walk through the differences so you can make an informed decision that protects your home and your financial future. 

What’s the Difference?

HELOCs are revolving credit lines backed by the equity on your home. Equity is defined roughly as the value of the home minus what you owe on it on the mortgage.  

With a HELOC, you borrow what you need when you need it and repay over a period of time. Most HELOCs have a draw period (often 5–10 years) followed by a repayment period. Rates are usually variable and tied to the Prime Rate, with current market rates ranging from 8% to 15% APR depending on your credit. 

HEIs are lump-sum investments from a company in exchange for a share of your home’s future value. You don’t make monthly payments, but when you sell your home, or after a set number of years, you owe one large repayment based on how much your home is worth at that time. The repayment is comprised of the original amount borrowed, plus a “risk investment” fee. That fee is a percentage of the value of your home. This percentage ranges typically from 2% to 30% of the property’s value, depending on the terms of the agreement. It also implies signing over that percentage share of your home, and the company holds partial ownership of the home, on which they have a partial lien. 

Real-world example: Borrowing $75,000 over 15 years

Your home starts at $500,000 and appreciates at 5% annually, reaching $1,039,464 after 15 years. You borrow using a HEI from a standard provider of this product, or a HELOC from OAS FCU. Let us assume that you have average credit, so not the worst but not the best. Because of that, the HEI provider offers you $75,000 for a 10% stake of your home’s future value. For comparison purposes, OAS FCU might offer you a loan for an APR of 8%. *

The following table includes what it would cost you to finance a HELOC from us. It also provides what an average Home Equity Investment would cost them for the same amount and repayment period. 

The bottom line

With a HEI you’d repay the original $75,000 plus 10% of your home’s future value ($103,946), totaling $178,946. You also surrender partial ownership of the property. With fees, your total cost is $183,446. However, you would not have to make monthly payments for 15 years.

With fees, your total cost on the HELOC is $131,013. You also might be able to deduct all or part of the loan interest, depending on how you use the HELOC funds*. Furthermore, we’ve calculated this considering a single lump sum loan disbursement. With a line of credit, you could borrow whatever you needed, whenever you needed it and save yourself the interest. However, you would have to make monthly payments that might change, based on the balance and the interest rate –which, as we said, would be variable. The property would remain in your name. 

Both options have their own advantages and disadvantages. We hope that this guide provides you the information you will need to make an informed decision that takes into account short and long term consequences when considering using your home’s equity.

* Important information about OAS FCU’s Home Equity Line of Credit:

All OAS FCU loans are for members only.

You may apply for a Home Equity Line of Credit (HELOC) any time after the first six (6) months of any previous mortgage loan transaction have elapsed.

The OAS FCU HELOC currently has an annual interest rate ranging between 6.50% – 11.50% as of November 1, 2025; any loan rate will be determined by your creditworthiness and repayment ability. The rate is variable -indexed based on the Prime Rate, to which a margin is added- and therefore subject to change without notice on any of the following dates: the first day of January, April, July, or October each year. An increase in the rate may result in a change in your monthly payment. The rate on this loan will never exceed 18% APR.

An OAS FCU HELOC is available for owner-occupied properties only. It is subject to a credit and repayment evaluation process, and you may not qualify or may qualify for a loan with different terms. OAS FCU will lend a maximum of 80% of combined Loan-to-Value (CLTV) based on the appraised value of the property. The minimum Home Equity Line of Credit amount is $20,000 with an initial advance of $5,000. Later advances will be at least $500. The draw period will extend for the first five (5) years after the opening of the line of credit. Appraisal, tax recording and other closing costs apply and will be at your expense. Please consult a tax advisor on the tax deductibility of interest.