Meaning & use
home equity loan
Last updated
Meaning
nouncountable
A loan secured against the part of your home you own outright, usually paid out as one lump sum and repaid in fixed installments.
Grammar: Usually a lump sum with a fixed rate; use take out a home equity loan.
Patterns
- take out a home equity loan
- a home equity loan for something
They took out a home equity loan to pay for a new roof.
A home equity loan lets you borrow against the value you have built up in your house.
He used a home equity loan to cover his daughter's tuition.
Word forms
| plural | home equity loans |
|---|
Common combinations
- take out a home equity loan
- We took out a home equity loan to remodel the kitchen.
- apply for a home equity loan
- She applied for a home equity loan at her local bank.
- pay off a home equity loan
- They paid off the home equity loan early.
- home equity loan rate
- The home equity loan rate was fixed for fifteen years.
- qualify for a home equity loan
- You need enough equity to qualify for a home equity loan.
Synonyms and how they differ
- second mortgage
- Second mortgage is a broader term for any loan secured on a home that already has a mortgage, and a home equity loan is the most common kind.
- HELOC
- A HELOC is a revolving line of credit you can draw on repeatedly, whereas a home equity loan is a single lump sum.
- equity loan
- Equity loan is a shorter form, but in some countries it means a different government scheme for buyers.
Word family
- equity noun
- the value of a home above what is owed on it
- mortgage noun
- a loan used to buy property
- collateral noun
- property pledged to guarantee a loan
- lender noun
- a person or bank that gives a loan
Commonly confused: home equity loan or home equity line of credit?
home equity loan vs home equity line of credit
A line of credit works like a credit card limit that you can use repeatedly, while a loan gives you a single sum up front.
Practice
A homeowner gets a single lump sum with a fixed interest rate, secured on their house. What is this?
Choose one answer.
A home equity loan is secured by the value of the home and paid out at once. The others are not secured on a house.
Make it your own
Write a sentence using “home equity loan”, then check it and compare it with the examples above.