These are loans positioned after the first mortgage, which is one of the reasons the interest rates for these types of mortgages are usually higher than those of the first mortgage (also because the loan amount is usually lower and because the 'Loan to Value' is always higher). These loans are commonly used for debt consolidation, home improvements, etc, as well as using them to 'piggyback' on a first mortgage to avoid paying the higher interest rate and mortgage insurance that generally results from loans that are over 80% of a property's value.

2nd Mortgage Loans are trust deeds that are generally of 15 or 30 year terms and the rate is usually fixed. Home Equity Loans are generally adjustable rate programs based on the prime rate. These loans are most frequently used as 'open lines of credit' borrowed against the home as collateral. This means you can have a loan amount that fluctuates through out the life of the equity loan depending on whether the borrower chooses to pay down the line of credit or chooses to use more of the line of credit than is being paid back on a monthly basis.

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