Open-ended loans are loans with a fixed-limit line of credit that can be borrowed from again after they have been repaid. A home equity line of credit, or HELOC, is an open-ended loan.
HELOCs work like this: The lender approves you for a certain amount of credit based on a percentage of your home’s appraised value, minus the balance owed on your mortgage. The sum acts as a credit line you can borrow from, pay back and borrow from again.
Homeowners renovating their home may want to consider this option to fund the project.