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Cash-Out Refi vs HELOC vs Personal Loan

Cheapest way to borrow $50,000

Compare three ways to get the same cash: refinancing into a bigger mortgage, opening a home equity line of credit, or taking a personal loan. Enter what you need, your current mortgage, and the rates you’ve been quoted. We’ll show which costs least overall and what each does to your monthly payment.

  1. Three ways to get cash

    Your is your home’s value minus what you owe. A swaps your mortgage for a bigger one and pays you the difference. A is a separate credit line on top of the mortgage you keep. A personal loan doesn’t use your home at all.

  2. Check your current rate first

    A cash-out refinance changes the rate on everything you owe, not only the new cash. If your current rate is lower than today’s rates, you give that rate up on your whole balance. A HELOC or personal loan leaves your mortgage alone.

  3. We compare total cost

    For each option we add up the extra interest and fees compared with not borrowing, then subtract estimated tax savings. Lenders also limit how much you can borrow against your home, measured as or .
Your balance and rate are on your latest mortgage statement. The other rates start at rough defaults, so swap in real quotes once you have them. The refinancing guide covers the cash-out option.
What’s the cash for?
You and your home

How much you want to borrow, and the mortgage you already have. Your latest mortgage statement shows the balance and rate.

$
$
$
%
Option 1: Cash-out refinance

A new, bigger mortgage pays off your current one and you keep the difference as cash.

%
mo
$
Option 2: HELOC (home equity line of credit)

A credit line on top of your current mortgage, which stays as it is.

%
mo
$
Option 3: Personal loan

An unsecured loan: your home isn’t at risk, but the rate is higher and the term shorter.

%
mo
Taxes

Used only to estimate the value of deducting interest when the cash goes into the home.

%

Because the cash is for home improvement, interest on it may be deductible if you itemize. This rate sets how much that deduction is worth.

Lowest total cost

Personal loan

$2,763/mo total payment · total cost $15,978 · saves $36,029 vs HELOC

Lowest total cost

Personal loan

$15,978 more than not borrowing

Cash to borrow

$50,000

before closing costs

Home value

$600,000

you owe 50.0% of it now (LTV)

Owed after a HELOC (CLTV)

58.3%

of the home’s value; lenders often cap at 85-90%

What this means

A personal loan costs the least overall: about $15,978 in extra interest and fees over the life of the loan, after estimated tax savings, compared with not borrowing at all. That’s $36,029 less than the HELOC. It comes out ahead because it’s repaid in 5 years, so interest has less time to add up, even at a higher rate. The trade-off is a higher monthly payment.

Also check that the monthly payment fits, and remember that HELOC rates usually change with the market. Tax savings assume you ; if you take the standard deduction, they’re zero.

Your total monthly payment

Cash-out refinanceone new 30-year loan replaces your current payment$2,312
HELOCcurrent mortgage + $358 interest-only; the HELOC part rises to about $626 after year 10$2,021
Personal loancurrent mortgage + $1,100 for 5 years$2,763

Today you pay $1,663/mo in . Property tax and insurance aren’t included.

All three options

Ranked by total cost: the extra interest and fees compared with not borrowing, minus estimated tax savings. Monthly payments include your current mortgage when you keep it.

Personal loanLOWEST COST
Rate: 11.50%Term: 5yrMonthly, all loans: $2,763Total cost: $15,978
  • •Unsecured: your home is not collateral, so there is no lien on it
  • •Higher rate, and no closing costs in this model (some lenders charge an origination fee, which raises the real cost)
  • •Shorter term means a higher monthly payment but less total interest
  • •Interest is not tax-deductible
HELOC
Rate: 8.50%Term: 20yrMonthly, all loans: $2,021Total cost: $52,006interest may be tax-deductible
  • •Keeps your existing 4.25% mortgage untouched
  • •Modeled as 10 years of interest-only payments at $358/mo (the draw period), then 10 years of principal and interest at about $626/mo. Expect that jump when repayment starts.
  • •HELOC rates are usually variable (the prime rate plus a margin), so the payment can also rise with market rates
  • •Interest may be tax-deductible because the cash goes into the home
  • •Mortgage plus HELOC: 58.3% of the home's value (CLTV)
Cash-out refinance
Rate: 6.75%Term: 30yrMonthly, all loans: $2,312Total cost: $234,191interest may be tax-deductible
  • •Replaces your 4.25% mortgage with a new 6.75% loan
  • •$66,748 of the lifetime interest is on the cash you take out; it stays deductible because the cash goes into the home. Interest on the existing balance you refinance remains deductible either way.
  • •Your current rate is better. Refinancing means paying 2.50 percentage points more on the entire balance, not only the cash-out portion.
  • •New loan: $356,500 (59.4% of the home's value)
Tax-deductibility: Since the 2017 (made permanent in 2025), interest on new home-secured borrowing (cash-out and HELOCs) is only deductible when the money is used to buy, build, or substantially improve the home securing the loan. Interest on the existing balance you refinance stays deductible, and financed closing costs don’t count as acquisition debt (debt used to buy or improve the home). Each option is credited (or debited) for the change in deductible interest versus keeping your current mortgage. Personal loan interest is never deductible. The tax savings shown above assume you itemize, stay under the $750k acquisition-debt limit, and get the full marginal benefit on every dollar of qualifying interest. If your other itemized deductions don’t already exceed the standard deduction, real savings will be lower (potentially zero). The Refinance calculator’s advanced tax settings give a more rigorous treatment. Watch for the rate trap: if your existing mortgage rate is below the refi rate, a cash-out refi re-prices your entire balance, which is almost always worse than a HELOC, even at a higher HELOC rate.

Results are estimates based on your inputs and the assumptions on this page, not quotes or advice. A lender, servicer, or tax advisor will give you different numbers. Disclaimer

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Terms used on this page

The loan types, lender limits, and costs behind the comparison above.

Home equity
Your home’s current value minus what you owe on it. It’s what you can borrow against.
Cash-out refinance
A new, larger mortgage that pays off your current one and gives you the difference in cash. Your whole balance moves to the new rate and term.
HELOC (home equity line of credit)
A credit line secured by your home that sits on top of your existing mortgage. You typically pay interest only during a draw period (often 10 years), then principal and interest. More
HELOAN (home equity loan)
A fixed-rate second mortgage paid out as one lump sum. Like a HELOC, it leaves your first mortgage untouched, but payments are predictable from the start. More
Personal loan
An unsecured loan, so your home isn’t collateral. Rates are higher and terms shorter than home-secured borrowing, and the interest isn’t tax-deductible.
LTV (loan-to-value)
What you owe divided by what the home is worth. Lenders usually cap a cash-out refinance at 80% LTV. More
CLTV (combined loan-to-value)
Like LTV, but it adds every loan on the home, such as a mortgage plus a HELOC. Lenders often cap it around 85% to 90%. More
Rate trap
When your current mortgage rate is below today’s rates, a cash-out refinance re-prices your entire balance at the higher rate, not only the new cash.
Marginal tax rate
The tax rate on your last dollars of income. It sets how much each dollar of deductible interest saves you, if you itemize.
Closing costs
One-time fees to take out a loan, such as the appraisal, title insurance, and lender fees. Much higher for a refinance than for a typical HELOC. More

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