Been having some trouble trying to figure out our options so hoping the community can help. We have a 7 year fixed interest only loan that becomes amortized and variable based on prime + 1 for the remaining 23 years. Our house cost 250k and the loan was for 200k at 3.2%. We’ve since paid of 40k of the principle, our home has appreciated to 300k on Zillow, and we’ve spent 40k finishing our basement further increasing the value of our home.
I would like to get a heloc to access the extra value of our house, but our bank says they and most banks won’t put a heloc on top of an interest only loan because it’s against there policy. They said the only option is to do a complete refi and get a new loan, which I don’t want to do because interest rates have increased since.
Is there a different type of heloc/mortgage product that I can look into for a case like this?