Two Ways to Borrow Against Your Home

A home equity loan hands you a lump sum at a fixed rate, repaid in equal installments over a set term — predictable, like a second mortgage. A HELOC is a revolving line of credit: during the draw period you can borrow, repay, and re-borrow, paying interest only on what you use, at a variable rate tied to the prime index. That flexibility makes the HELOC's minimum payment look dramatically smaller, but it is interest-only, and the rate resets — payments can jump when rates rise or when the draw period ends and the balance must be amortized. If you need one known amount for a renovation, the fixed loan is usually safer; if you need flexible access over years and can handle rate risk, the HELOC wins.