A HELOC loan works as a revolving credit line secured by the equity in your home, functioning very similarly to a standard credit card. During the initial draw period, you can borrow money up to your approved limit and pay interest only on the exact amount you spend. After the draw period ends, the loan enters a repayment period where you can no longer borrow and must pay back both principal and interest. Because your house serves as collateral, defaulting on monthly payments puts your property at risk of foreclosure.