A home equity is can be described as a second mortgage loan. In a home equity loan, you have to repay a fixed amount of money over a fixed period. Usually, a home equity loan calls for equal payments that pay off the entire loan within that fixed tenure.

A home equity line of credit (HELOC) is a type of revolving credit where your home, rather the market value of your home serves as the collateral. As a homeowner, you can utilize a HELOC for such purposes as education, home improvements etc.

Another difference between credit line and HELOC is that before applying for a home equity line, you should understand that any homeowner is approved for a specific line of credit, i.e. the maximum amount that you can borrow. Once approved for a line of credit, you will typically be able to borrow up to your credit limit whenever you wish. HELOC plans typically include a fixed time during which you can borrow money, such as 10 years.

APR plays an important part in equity loan or credit line. APR, also known as the annual percentage rate for any traditional mortgage or home loan takes into account the interest rate charged in addition to points and other charges. ARP for a home equity line, as opposed to home loan, depends on the periodic interest rate and does not include points or other charges.