With this loan you only borrow what you need, though the rates can change. The maximum interest rate is normally high, bur you pay interest only on what you borrow. Payments can change; there is flexible access to funds. Its harder to refinance your first mortgage, and the interest may be tax deductible.

In a typical mortgage, the Borrower receives the entire value of the loan amount when the loan "closes."

Home Equity Lines act more like a credit cards; a line limit is set by the Lender to be retreived at will by the Borrower in whatever amount below the approved maximum limit is agreed between the parties; The Borrower can also work with the Lender to increase the loan limit after the initial line of credit has been granted and payments have been made in a prompt manner by Borrower; and some Banks even issue actual credit cards for use by Borrower, which are linked to the HELOC balance directly.

HELOCs do not have to be in second position (second trust deed), although that is their most common lien position. They can be held in first or, less commonly, third position.

Most HELOCs require good to excellent credit history, and reasonable loan-to-value and combined loan-to-value ratios. Often they can be acquired more quickly and with less expense to the home owner.

Typically, Rates are based on the Prime Lending Rate plus a Margin (Prime Rate+Margin Value = Note Rate).