HELOC vs home equity loan: which fits me?

Both borrow against the equity in your home, and both use the home as collateral. A home equity loan pays one lump sum, usually with a rate set for the full term and equal payments. A HELOC is a line: you borrow during a draw period and pay back during a repayment period.

Key facts

Home equity loan, how you get the money	One lump sum source
Home equity loan, rate and payments	Usually fixed for the full term, with equal payments that pay off the loan source
HELOC, how you get the money	Draws from a line during the draw period, then a repayment period source
HELOC, rate	Many are variable; on the line we arrange, fixed for the full term of each draw source
Both	Your home is the collateral; falling behind can mean losing it source

A home equity loan and a home equity line of credit sound alike. Both let you borrow against your home. They differ in how the money comes to you and how you pay it back.

Side by side

This table uses the CFPB's general descriptions. The last column shows the line Click Mortgage arranges.

	Home equity loan	HELOC in general	The line we arrange
How you get the money	One lump sum	Draws from a line during the draw period	Draws follow the terms you get in writing
Rate	Usually fixed for the full term of the loan	Usually variable	Fixed for the full term of each draw
Payments	Equal payments that pay off the whole loan	Can change if the rate is variable	Set out in your terms before you sign
Need more money later	Apply for a new loan	Borrow again during the draw period	Later draws follow the terms you get in writing
Your home	Collateral	Collateral	Collateral
Your first mortgage	Stays as it is	Stays as it is	Stays as it is

What do the two have in common?

Both borrow against your equity. Equity is your home's value minus what you owe on it. Both put your home at risk if you cannot repay. Both often must be repaid when you sell the home. And both leave your first mortgage in place.

When can a home equity loan fit?

A home equity loan can fit if you know the full amount you need today. You get it all at once and repay it in equal payments.

When can a HELOC fit?

A HELOC can fit if you want a line with a set draw period and a repayment period after it. On the line we arrange, the rate on each draw is fixed for the full term of that draw.

Click Mortgage arranges home equity lines. We are not the lender; a licensed lender funds the line.

How to decide

Ask yourself three things:

Do you need the whole amount now?
Do you want the same payment every month, or terms set for each draw?
How long do you plan to stay in the home?

Answer a few questions online and your pre-approval decision comes by text and email. To learn the basics first, see what a HELOC is and how it works.

Questions people ask

Is a home equity loan a second mortgage?

Often, yes. The CFPB groups the two together. Like a HELOC, it sits behind your first mortgage and uses your home as collateral.

Which one keeps my current mortgage rate?

Both do. Neither replaces your first mortgage. A cash-out refinance is the option that replaces it.

Does checking my options affect my credit score?

No. The first check with us is a soft inquiry. A hard inquiry may follow at the application stage with the lender.

See what a line on your home could be.

A few questions, a soft credit check only, and your pre-approval decision by text and email.

Check what you can borrow