Managing Debt

How Much Home Equity You Need to Consolidate Your High-Interest Debt?

Couple in their living room reviewing home equity loan options that can help them pay off their debt

Many home owners today are turning to home equity loans for debt consolidation since they may often carry lower interest rates than other lines of credit. Securing a Discover® Home Loans home equity loan may also help you finance unexpected life events and expenses. If you have equity in your home, you may qualify to use home equity in order to consolidate your debt and pay a lower interest rate on one monthly payment. If you are interested in using a home equity loan for debt consolidation, there are a few steps to take before you start.


First, you should understand exactly how debt consolidation merges your financial obligations. A debt consolidation loan may be used to pay down your credit cards, auto loan and miscellaneous debt you want consolidated into one monthly payment at a fixed low interest rate. However, consider the fact that although your monthly payments may be lower, you may end up paying more in interest over the life of the loan if the term is longer.


In order to qualify for a home equity loan, you must first have enough equity since you'll be borrowing against the value of your home.

Before you begin to contact creditors, gather all of the latest statements, bills and loans you want to consolidate. You will want to know how much you owe, the APR you're currently paying and whether you pay more than the minimum amount each month. Below are suggested statements and bills to consider including:

  • Auto loans
  • Credit cards
  • Personal loans
  • Other equity loans


After you're finished compiling all of the information and statements, use a debt consolidation calculator to help figure out your total debt, how long it will take to pay it off and your potential savings with debt consolidation. Discover's debt consolidation calculator is a free tool to aid people in calculating how much they need to consolidate their debt. Although helpful, these calculators do not take the place of a financial planner.


Home equity loans for debt consolidation are considered secured loans because they are tied to an asset, your home. Do your own research to figure out if a secured home equity loan is the right choice for your particular situation.


Once you've decided to use a home equity loan for debt consolidation, consider its implications.

Arm yourself with the knowledge to decide if debt consolidation can improve your financial situation. Then consider your options for the type of debt consolidation you would need. If you have enough equity in your home and are looking for a lower-interest loan, a home equity loan for debt consolidation could be the right choice for you.

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  • Weekdays 8am–Midnight ET
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