Home Equity Loans

Home Equity Loans - what does it mean? A home equity loan (sometimes abbreviated HEL) is a type of loan in which the borrower uses the equity in their home as collateral.
Home equity loans are most commonly second position liens (second trust deed), although they can be held in first or, less commonly, third position. Most home equity loans require good to excellent credit history, and reasonable loan-to-value and combined loan-to-value ratios. Home equity loans come in two types, closed end and open end.

Usually it is referred to as second mortgages, because they are secured against the value of the property, just like a traditional mortgage. Home equity loans and lines of credit are usually, for a shorter term than first mortgages. In the United States, or Canada it is sometimes possible to deduct home equity loan interest on one's personal income taxes.