A home equity loan is a type of mortgage that allows you to convert a part of your homeownership into cash. In simpler terms, it allows you to use the equity that you’ve built in your home over the years. The home equity loan is often known as a second mortgage because they add another loan payment to your primary mortgage. These loans provide borrowers with a large, lump-sum amount of money, which they have to pay back in fixed installments over a predefined period of time.

Since they are fixed-rate loans, the interest rate remains constant throughout the loan term. Easier to qualify, the home equity loan gives you the freedom to use your funds as you want – home improvement, renovation, or to cover other major expenses.