A HELOC is a line of credit that usually has a variable interest rate and a revolving credit limit that functions similarly to a credit card. It lets you borrow when you need to instead of all at once*.
A HELoan is a loan that typically has a fixed interest rate and is disbursed in a lump sum at the beginning of the loan. It’s a bit like a second mortgage: you’ll start repaying it immediately through fixed monthly payments.
HELOCs and HELoans are both secured by your house. This allows borrowers to access larger sums of money at lower rates.
For more information on the differences between a HELOC and a HELoan and how you might choose if one of them is the best option for you, visit Prosper’s popular blog article that spells it all out: “HELOC vs HELoan: What’s the difference?”