Second Mortgages: HELOC vs HELOAN 

What Is a Second Mortgage?

A second mortgage lets you borrow against the equity in your home while still keeping your original mortgage. It's a great way to access cash without refinancing your first loan, especially if you're locked into a great rate. Second mortgages can be used for home renovations, debt consolidation, education, business funding, and more.

Our second mortgage product allows you to check you eligibility with a soft credit pull, and generally only requires an AVM (Automated Valuation Model) for the property valuation. We even allow DSCR options for Investment Properties! Review your eligibility at the link below:

Free Second Mortgage Application

Types of Second Mortgages

🔁 Home Equity Line of Credit (HELOC)

• Revolving credit—borrow as needed, similar to a credit card
• Variable interest rate (monthly payments may fluctuate)
• Draw period usually 5–10 years, then a repayment period
• Interest-only payments often available during the draw period

Best for: ongoing expenses like renovations or tuition

💵 Home Equity Loan (HELOAN)

• One-time lump sum payment
• Fixed interest rate and monthly payments
• Term length: typically 5–30 years
• Predictable payments and no access to funds after disbursement

Best for: large, one-time expenses like medical bills or debt consolidation

Benefits of a Second Mortgage

• ✅ Access cash without refinancing your first mortgage
• ✅ Lower interest rates compared to credit cards
• ✅ Flexible use of funds
• ✅ Potential tax benefits if used for home improvements (check with your tax advisor)
• ✅ Can increase home value if used for upgrades

Downsides to Consider

• ⚠️ Your home is used as collateral—missed payments could lead to foreclosure
• ⚠️ Reduces your home equity
• ⚠️ Closing costs and fees apply
• ⚠️ HELOC rates may fluctuate over time
• ⚠️ Adds a second monthly payment—must budget accordingly

Quick Comparison Table