What is a HELOC?

A HELOC is a revolving line of credit where you can borrow money and repay it as needed. The amount you can borrow is determined by your home’s equity – your home’s value minus the amount you owe.

Check out this video on 4 Great Ways to Use a HELOC.

What is a 2nd Mortgage?

A second mortgage is a loan that is secured by your home and taken out while you’re still paying off your first mortgage. Like the first mortgage, it uses your property as collateral. Experian describes the first mortgage as the loan that helps you purchase your home, while the second mortgage allows you to borrow against the equity you’ve built in your property.

Flexibility

HELOC: A HELOC offers more flexibility since you control how much you borrow and when.

2nd Mortgage: With a 2nd mortgage, you receive all of the money up front.

Interest Rates

HELOC: They typically have variable interests rates, but Launch offers a HELOC at a fixed interest rate. One of the best features of a HELOC is that you only have to pay interest on the amount that you borrow, not the total amount of the loan.

2nd Mortgage: Has a fixed interest rate. Once you receive payment you start paying interest on the loan immediately.

Repayment

HELOC: With a HELOC, you only have to pay interest during the draw period on what you borrow.

2nd Mortgage: With a 2nd mortgage, you have fixed monthly payments.