HELOCs Without Prepayment Penalties
If you want to pay back your home equity line of credit (HELOC) early, you might need to pay a prepayment penalty fee with some lenders. Lenders charge prepayment penalties between 1% and 5% of the total loan to discourage borrowers from paying back the balance early. Lenders expect to earn interest on the loan […]
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If you want to pay back your home equity line of credit (HELOC) early, you might need to pay a prepayment penalty fee with some lenders. Lenders charge prepayment penalties between 1% and 5% of the total loan to discourage borrowers from paying back the balance early. Lenders expect to earn interest on the loan for multiple years, but if you pay it back early, lenders miss out on interest fees and earn less.
However, some lenders don’t charge prepayment penalty fees, which means you have more control over the repayment process. Here are our top three HELOC lenders without prepayment fees.
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3 HELOCs with no prepayment penalty
Figure, Hitch, and Bethpage FCU don’t charge prepayment fees, so you won’t pay additional penalties if you repay your balance early or close the HELOC before the draw period ends.
Working with a lender that doesn’t charge prepayment fees makes sense if you plan to pay your balance early or close the account before the draw period ends. But it’s also important to review other potential fees before deciding. For example, some lenders that don’t assess prepayment penalties charge origination fees.
It’s essential to understand the loan’s actual cost before signing up. Here’s a breakdown of common fees from our top HELOC lenders.
| Lender | Rates (APR) | Other fees |
| Figure | 8.35% – 16.55% |  4.99% origination fee |
| Hitch | 8.25% – 13.00% | $45 – $800 appraisal fee 2.5% origination fee |
| Bethpage FCU | 12-month intro rate of 6.99% for VantageScores of 720 and up; then a variable rate |  None* |
Here’s everything you need to know about the top HELOC lenders without prepayment penalties.
Figure – Best overall
LendEDU rating: 4.9 out of 5
- Competitive fixed rates: 8.35% – 16.55% APR
- Quick and hassle-free process
- Must borrow 100% of your credit line (minus fees) at closing
Figure stands out for its streamlined process, which can deliver funding in as few as five days, making it an efficient choice for homeowners. We’re big fans of Figure’s fixed-rate model, which provides borrowers with stability and predictability in their repayment plans. This feature, combined with the absence of a required in-person appraisal, simplifies and speeds up the borrowing process.
Because Figure requires borrowers to withdraw the entire amount of their approved credit limit at closing, minus any applicable fees, you’ll accrue interest on the full amount immediately. This HELOC is best for those planning to draw the full amount right away. Be sure to factor the origination fee into your financial planning, which can be as high as 4.99%.
Checking your rate with Figure does not affect your credit score, a feature that encourages prospective borrowers to explore their options. However, note that Figure is not available in Delaware, Hawaii, Kentucky, New York, or West Virginia, and the borrowing range of $20,000 to $400,000 may not cater to all potential borrowers.
Hitch – Best for accessing up to 95% of equity
LendEDU rating: 4.4 out of 5
- Rates starting at 7.75% APR
- Borrow up to $500,000
- Must borrow 100% of your credit line (minus fees) at closing
Hitch is unique because it allows access to up to 95% of a home’s equity. This is much higher than many competitors, positioning Hitch as an excellent choice for those needing substantial funds. Hitch’s rates are competitive, allowing borrowers to access amounts ranging from $25,000 to $500,000. This offers considerable flexibility for small-scale investments or major expenses.
A standout feature of Hitch is its personalized service. It assigns every borrower a dedicated loan officer, which ensures a tailored borrowing experience and dedicated support throughout the loan process. However, Hitch’s lack of transparency regarding its eligibility requirements may pose challenges for potential borrowers.
During our research, we determined that applicants must have a minimum credit score of 640 and reside in specific states, including California, Colorado, Connecticut, Delaware, Florida, Illinois, Maryland, New Hampshire, New Jersey, New York, North Carolina, Oregon, Pennsylvania, South Carolina, Virginia, Washington, and Washington, D.C.
Bethpage FCU – Best credit union
LendEDU rating: 4.5 out of 5
- 12-month intro rate of 6.99% APR for VantageScores of 720 and up; then a variable rate
- Borrow $10,000 to $1 million
- No application, origination, or appraisal fees
We like Bethpage Federal Credit Union for its generous terms and minimal fees. Offering HELOCs ranging from $10,000 to a substantial $1 million, Bethpage caters to a wide spectrum of borrowing needs, from modest renovations to major investments. Bethpage stands out for the absence of fees, coupled with no closing costs.
Bethpage further enhances its appeal with a 12-month fixed introductory rate for qualified borrowers. This provides an opportunity for homeowners to manage their finances with predictable payments at the outset of their loan terms. Note that you must withdraw at least $25,000 at closing if you qualify for this rate.
Bethpage allows borrowers to convert some or all of their HELOC balance to a fixed-rate loan at any time, without incurring additional costs. However, the closing process at Bethpage can take six to 10 weeks on average, which is longer than the lenders we mentioned above.
How much can you save without a prepayment penalty?
HELOC prepayment penalties can range from 1% to 5% of the loan amount, often totaling thousands of dollars. Lenders may charge penalties if you close the account before the draw periods end or pay back the balance early.
How prepayment fees work
For example, imagine you have a $75,000 HELOC with a 10-year draw period and a 20-year repayment term. You use the entire line of credit and close the account during the draw period. Your prepayment penalty could range from $750 to $3,750.
You could also face prepayment penalties if you repay the balance early. For example, let’s say you have a HELOC balance of $50,000 and pay it back early due to an unexpected inheritance. If your lender charges prepayment fees, this could cost you $500 to $2,500.
Even if some lenders don’t charge prepayment fees, closing your account early could still result in unexpected costs. For instance, Bethpage requires borrowers to repay the closing cost fees if they close their accounts within three years. The lender estimates these costs to range from $500 to $15,000.
Before committing to a loan, it’s crucial to review your contract and seek clarification on any unclear terms.
Our expert recommends
Being able to pay off a HELOC early without a prepayment penalty could help you save thousands of dollars, which you could then invest or pay down other debt. Given the option, I would advise a borrower to elect a HELOC that does not charge prepayment penalties over one that does. However, if the company charges other costs or fees instead of a prepayment penalty, I would advise weighing those costs against the term of the HELOC to understand where the greater savings are obtainable. Paying the prepayment penalty could be more advantageous than paying other fees. The bottom line is to do your research and number crunching; consult a financial professional or a trusted friend or family member if in doubt.
Benefits of paying off your HELOC early
Paying off your HELOC early can save you thousands of dollars. Average HELOC interest rates can range from 9% to 13%. Even with a competitive rate, the interest charges add up; the average HELOC limits range from $75,000 to $175,000.
Imagine you have a HELOC with a limit of $100,000 and a fixed interest rate of 10%. You use $80,000 to renovate your kitchen at the end of the draw period. Once the repayment period begins, you might pay $772.02 per month, and your total interest charges of $105,284.16 add up to more than the original balance.
Let’s say you have the same balance and terms but decide to repay the line of credit in 10 years instead of 20. Your monthly payments would be higher, at $1,057.21. But your total interest charges would be $46,864.71, which is less than half of what you would pay with a 20-year repayment term.
Repaying your loan early can save you tens of thousands of dollars, so finding a lender with no prepayment penalties may be worth it. If you can pay off your balance early, we recommend choosing a lender that doesn’t charge these fees.
Recap: 3 best HELOCs without prepayment penalties
| Lender | Rates (APR) |
| Figure | 8.35% – 16.55% fixed |
| Hitch | 8.25% – 13.00% |
| Bethpage | 12-month introductory rate starting at 6.99% for VantageScores of 720 and up, with variable post-introductory rates starting at 8.50% |
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