Is a Home Equity Line of Credit a Second Mortgage?

Is a Home Equity Line of Credit a Second Mortgage?

 When homeowners look to tap into their home’s equity, they’re often faced with a wide range of options—and just as many questions. One of the most common questions we hear is: Is a HELOC a second mortgage? The short answer is yes—but with a few important caveats. In this blog post, we'll break down the key differences between a HELOC, a home equity loan, and other related products like reverse mortgages  and closed-end second mortgages, so you can make an informed decision.

What Is a HELOC and Is It a Second Mortgage?

 A  HELOC (Home Equity Line of Credit)  is indeed a type of  second mortgage , but it functions differently than a traditional home loan. When you take out a HELOC, you're borrowing against the equity in your home—just like a home equity loan—but instead of receiving a lump sum, you get a revolving line of credit you can draw from as needed.

Key features of a HELOC:

• Works like a credit card: draw funds, repay, and reuse
• Variable interest rates (though fixed-rate options are available with some lenders)
• Typically has a draw period (e.g., 10 years) followed by a repayment period

Curious how much equity you could qualify to borrow?  Contact Bonelli Financial Group today and let our experts guide you.

 The term “second mortgage” is a broad category that includes both HELOCs and home equity loans. The main difference between a 2nd mortgage and a HELOC comes down to how the funds are disbursed and repaid.   

Feature | Home Equity Loan (Second Mortgage) | HELOC (Second Mortgage) Disbursement                              Lump sum                                           Revolving line of credit
Interest Rate                             Typically fixed                                              Usually variable
Repayment                           Begins immediately                                  Draw + repayment periods  Best For                                 One-time expenses                                    Ongoing access to funds  

 HELOC vs Mortgage: Are They the Same?

 A HELOC vs Mortgage comparison reveals major structural differences. A primary mortgage  is what you use to purchase your home. A HELOC, on the other hand, is typically a second mortgage that lets you borrow against the equity you’ve built.

So while both use your home as collateral, a HELOC is not the same as your primary mortgage . It sits behind your first mortgage in lien position, meaning it's second in line if the home is foreclosed.

 HELOC vs Second Mortgage vs Home Equity Loan

Let’s clarify the three often-confused terms:

Second Mortgage: Any loan taken out using your home equity while a first mortgage still exists. This includes both HELOCs and home equity loans.

Home Equity Loan: A second mortgage that gives you a one-time lump sum.

HELOC: A second mortgage offering a flexible credit line.

This makes the “Second Mortgage vs Home Equity Loan vs HELOC” debate more about loan structure than category—both loans fall under the umbrella of second mortgages.

Not sure which second mortgage option fits your needs? Schedule a free consultation with a loan specialist at Bonelli Financial Group by clicking here.

 A reverse mortgage is another way to access home equity, but it’s quite different from a HELOC. Designed for homeowners aged 62 and older, a reverse mortgage allows you to receive payments from your equity rather than making monthly payments.

Feature                                  Reverse Mortgage                                HELOC (Second Mortgage)
Age Requirement                                62+                                                               None
Repayment                               Upon sale/death                                  Monthly payments required Ownership                     Retained, but equity decreases                                  Retained   

So in a reverse mortgage vs HELOC scenario, the right choice depends on age, financial goals, and repayment comfort.

Closed-End Second Mortgage vs HELOC

A closed-end second mortgage is similar to a home equity loan. You borrow a fixed amount with a fixed rate and term. Unlike a HELOC, there's no revolving credit—once you repay it, it’s done.

In the closed-end second mortgage vs HELOC comparison:



• Choose  HELOC  for flexibility and ongoing access to funds.
• Choose  closed-end  if you need a large, one-time amount and prefer stable payments.

HELOC vs Mortgage Calculator

 If you're unsure whether a HELOC or a traditional mortgage refinance is better for your situation, using a mortgage calculator can provide clarity. These tools compare:

• Total interest paid
• Monthly payments
• Long-term cost differences

A calculator can help you understand how HELOC Rates vs Mortgage Rates will affect your overall finances.

Want help crunching the numbers? Our advisors at Bonelli Financial Group will walk you through personalized options using the latest tools and calculators. Contact us today.  

HELOC Rates vs Mortgage Rates

Final Thoughts: Is a HELOC Right for You?