A second mortgage is one that has a lien position subordinate to the first mortgage. This is usually loaned in one lump sum and typically has a fixed interest rate and monthly payment. A Home Equity Line of Credit, or HELOC, is a mortgage loan in second position that allows a borrower to obtain cash drawn against the equity in the home and is made available through writing checks on the account. Payments are always interest only and can be reused if paid down.

Benefits

1. The interest on both loans is deductible, where on a credit card, it is not.
2. A Second Mortgage can allow you to avoid private mortgage insurance if you are putting less than 20% down on your home.
3. Home equity loans give you relatively easy access to cash.
4. The interest rate on a Home equity loans is typically much lower than for credit cards.

Draw Backs

1. If you sell your home, most plans require you to pay off your Home Equity Loan at that time, where as a credit card does not.
2. Interest rates on a second loan can be higher than on a first mortgage.
3. Home Equity Lines of Credit require you to use your home as collateral for the loan.