A fixed home equity loan is a second mortgage secured by the equity in your home. You receive the proceeds at closing and repay principal and interest on a set schedule without replacing your first mortgage.
How a fixed equity loan works
The lender determines an eligible amount from your property value, existing liens and maximum CLTV, then reviews income, credit and debts. The full loan begins accruing interest when funded.
- One lump-sum disbursement
- Fixed principal-and-interest payment
- Terms commonly span multiple years
Best uses for a lump-sum equity loan
This structure can suit a defined renovation, known debt payoff, major purchase or other one-time cost. When the amount or timing is uncertain, a revolving HELOC may offer more flexibility.
Compare total cost—not just payment
Review APR, note rate, origination charges, appraisal or valuation fees, closing costs, term and prepayment rules. Extending the term can lower the payment while increasing total interest.
Fixed loan vs. HELOC
A fixed loan prioritizes certainty; a HELOC prioritizes repeated access. The better fit depends on whether you know the amount needed and how comfortable you are with a variable rate.
Frequently asked questions
Questions homeowners ask
Can I have a home equity loan with a mortgage?
Yes. The equity loan typically becomes a second lien behind the existing first mortgage.
What determines the home equity loan rate?
Credit profile, CLTV, term, property, occupancy, loan amount and market conditions can all affect pricing.
Are closing costs required?
Costs vary by program. Compare no-cost offers carefully because expenses may be reflected in the rate or early-closure terms.