HELOC borrowers to tap lines to pay for winter home renovations
The vast majority of consumers with a home equity line of credit said they are considering using it to pay for planned home renovations this winter.
That was the case for 80% of the respondents who had an existing HELOC to a survey conducted for TD Bank by Maru Matchbox.
The average HELOC size was over $84,000. Slightly over half of the respondents said they planned to spend over $50,000 on renovations.
Home renovations were the leading reason that respondents tapped an existing HELOC during the past year, at 32%. Needing the money for an emergency was cited by 14%, while 12% said they used their HELOC to pay for education expenses.
"Using a HELOC to make renovations during the winter is a smart, cost-effective option for homeowners because they can take advantage of reduced prices on materials during annual holiday sales, and access a larger pool of contractors who may now be working on more flexible off-season schedules," said Mike Kinane, TD Bank's head of consumer lending, in a press release.
The number of HELOCs is expected to double over the next five years, according to TransUnion.
Approximately three-quarters of the respondents did not borrow against their HELOC over the past 12 months, with the leading reasons being they didn't have a specific use for the funds or that they were saving it for an emergency.
The survey consisted of 1,010 homeowners and took place during October.
TD Bank also surveyed an additional 200 borrowers that participated in a 2016 survey on HELOC resets.
More than twice as many borrowers ended up refinancing their HELOC in the past 12 months, 28%, then had said they planned to do so one year ago, 13%.
Over two-thirds of those borrowers that did refinance, 68%, kept the HELOC at the same amount or took a larger line of credit.
More than half, 52%, planned to stay in their homes for at least 10 more years. By doing so, there is an opportunity to build additional equity that can either be leveraged through refinancing an existing HELOC or by taking a new one after their current one has been paid in full and closed.