Equity LoanEquity loan refers to a loan based on the equity in a property. The borrowing and repayment behavior of the borrower is not an important factor. This loan is also known as second mortgage.
Generally home owners borrow against their equity in their homes. It is sometimes called as home equity line of credit. It is called so because the home equity loan is basically a line of credit secured by the home.
Once the line of credit draws down, the financial institutions place a second mortgage loan till the repayment of the loan. This loan can be used by the borrower. But if the loan is not paid, the loan provider could sell off the home to pay the remaining debt. The equity loan will have only adjustable interest rate rather than fixed interest rate. There are tow kinds of home equity loans .They are closed end home equity loan and open end home equity loan.
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