Both products sit behind your existing first mortgage and let you tap equity without disturbing it. The difference is structure: a HELOC is a revolving line at a variable rate, and a home equity loan is a one-time lump sum at a fixed rate.
A HELOC has a draw period during which you can borrow, repay, and borrow again at a variable rate. A home equity loan funds the full balance at closing at a fixed rate, with a fixed monthly payment from day one.
Choose a HELOC when you do not know the exact amount you will need, when access will be spread over time, or when you want optional liquidity for future projects without committing to a full balance now.
Choose a home equity loan when the amount is known, when you want a fixed payment that does not move with rates, or when the borrower benefits from a forced repayment schedule rather than the flexibility of a revolving line.
Related glossary terms
Compare three loan structures, calculate potential access, stress-test variable rates and use a fillable comparison worksheet.
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Both let you tap home equity. The right tool depends on what you need the money for, how long you need it, and what your current first mortgage looks like.
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