What is the difference between a home equity loan and a HELOC?

Both a home equity loan and a home equity line of credit (HELOC) let you borrow against the equity in your home. A home equity loan provides a lump sum with a fixed interest rate and fixed monthly payments — ideal for one-time large expenses. A HELOC works like a credit card: you have a revolving credit line you can draw from during a draw period (typically 10 years), followed by a repayment period. HELOCs usually have variable interest rates. Home equity loans offer payment predictability; HELOCs offer flexibility. Both are secured by your home, so defaulting puts your property at risk.