Why Second Mortgage Loans beat Home Equity Lines of Credit
by Richard Revis

HELOC products are slightly different in that they aren’t actually loans rather a line of credit that you pay interest on to use. Its concept is similar to a credit card but the interest rates are lower and it is asset backed by your house. The money is actually drawn on the equity of the home to a set limit and the contract for this line of credit can be anywhere from 10-30 years depending on the lender. With HELOC products, any amount that is paid back can be redrawn again. The interest rate for HELOC products are always variable and are generally higher than second mortgage loans.

When looking at any loan or line of credit product the most important figure to look at and understand is the annual interest rate. It determines how expensive the loan will be to maintain. This is particularly true for those who have opted for variable interest rate loan products where the amount payable can change by hundreds of dollar a month just from movements of interest rates.

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