Home Equity Product

Home Equity Loan:
Fixed Rate. Lump Sum. Predictable Payment.

Borrow against your home equity at a fixed rate with a fixed monthly payment, without touching your existing mortgage. Mortgages by Channing can help you access your equity the right way.

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✓ Fixed rate, no surprises✓ Lump sum at closing✓ First mortgage stays intact✓ Predictable monthly payment

The Basics

What Is a Home Equity Loan?

A home equity loan is a second mortgage that lets you borrow a lump sum against your home equity at a fixed interest rate. You receive the full amount at closing and repay it in equal monthly installments over a set term, typically 5 to 20 years. Your existing first mortgage stays completely intact.

It's sometimes called a "second mortgage" or "equity loan", but all three terms refer to the same product. The defining characteristics are straightforward: fixed rate, fixed payment, lump sum disbursement. There's no draw period, no variable rate, and no payment surprises. What you see at closing is what you pay every month until it's done.

Fixed

Rate for the full term

85%

Typical max combined LTV

620+

Typical min. credit score

5 to 20yr

Common loan terms

Second lien, your first mortgage is untouched

Like a HELOC, a home equity loan sits in second lien position behind your existing mortgage. Your current rate, payment, and term on your first loan don't change at all. This is the key reason both home equity products are preferred when your existing mortgage has a below-market rate, there's no reason to disturb a 3% or 4% first mortgage to access equity.

Structure

How a Home Equity Loan Works

The structure is simple, simpler than a HELOC in many ways. You apply, get approved for a loan amount based on your equity and credit, close, and receive the full amount in a single deposit. From there, you make the same fixed payment every month until it's paid off.

At Closing

Receive full loan amount as a lump sumWired to your account at or shortly after closing.
Rate is locked, won't changeYour rate is fixed at closing for the entire loan term. No index, no margin, no movement.
First payment due 30 days laterFull P&I from the first payment, no interest-only period.

During Repayment

Same payment every monthPrincipal and interest. Amount never changes for the life of the loan.
No additional drawsUnlike a HELOC, you can't pull more funds once the loan closes. It's a one-time disbursement.
Pay off early any timeNo prepayment penalty on most home equity loans. Extra payments reduce principal directly.

Eligibility

Home Equity Loan Requirements

Qualification is based on credit, equity, income, and combined loan-to-value, the same framework as a HELOC, but for a fixed second mortgage instead of a revolving line.

Requirement	Typical Standard
Credit Score	620+ (best rates at 700+)
Max CLTV	80 to 85% of appraised value
Min. Equity Required	15 to 20% remaining after loan
Max DTI	43 to 50% (varies by lender)
Income Documentation	Full doc, pay stubs, W-2s, tax returns
Appraisal	Required, establishes current value
Loan Terms Available	5, 10, 15, or 20 years (lender-specific)
Rate Type	Fixed for full term

CLTV calculation example

Home value: $400,000. First mortgage balance: $250,000. Max CLTV at 85%: $340,000. Maximum home equity loan: $340,000 − $250,000 = $90,000. The higher your equity and the lower your first mortgage balance, the more you can borrow.

Want To Know What This Looks Like On Your Numbers?

Every scenario is different. A soft credit check tells you where you actually stand, and nothing hits your report until you decide to move forward.

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Payment Examples

Home Equity Loan Payment Examples

Payment depends on loan amount, rate, and term. Here's what monthly P&I looks like across common amounts and term lengths at an 8.5% illustrative rate.

Loan Amount	10-yr term	15-yr term	20-yr term
$25,000	$310	$246	$217
$50,000	$619	$492	$434
$75,000	$929	$738	$651
$100,000	$1,239	$984	$868

Principal & interest only at 8.5% illustrative rate. Your actual rate depends on credit score, CLTV, and lender. Contact Mortgages by Channing for current rates.

Example: $75,000 Home Equity Loan at 8.5%, 15 years

Monthly payment

$738

Total payments over 15 years

$132,840

Total interest paid

$57,840

First mortgage — unchanged

Your existing rate and payment

Comparison

Home Equity Loan vs. HELOC

Both are second mortgages secured by home equity, but the delivery mechanism and rate structure are very different. See the full HELOC guide →

Factor	Home Equity Loan	HELOC
Funds Delivery	Lump sum at closing	Revolving line, draw as needed
Interest Rate	Fixed for full term	Variable, tied to Prime
Monthly Payment	Fixed P&I from day one	Interest only during draw period
Rate Risk	None, locked at closing	Yes, rises if Prime rises
Flexibility	Lower, one-time disbursement	Higher, draw, repay, redraw
Best For	One-time large expense, rate certainty	Ongoing projects, staged needs

vs. Cash-Out Refi

Home Equity Loan vs. Cash-Out Refinance

Both give you a lump sum, but a cash-out refi replaces your entire mortgage while a home equity loan sits behind it. The right choice depends heavily on your existing rate. See the full cash-out refinance guide →

Choose Home Equity Loan When...

Your existing mortgage rate is lowNo reason to touch a 3 to 4% first mortgage. The home equity loan sits behind it and preserves your rate.
You want fixed rate certainty without replacing your first loanFixed rate, fixed payment, without the rate risk of a HELOC or the full refi complexity of cash-out.
The loan amount is modest relative to your total balanceIf you need $50,000 and have a $400,000 first mortgage, a full cash-out refi just to access $50k may not be worth the cost.

Choose Cash-Out Refi When...

You can lower your first mortgage rate at the same timeIf today's rates are near or below your existing rate, a cash-out refi can lower your rate and pull cash simultaneously.
You want one loan, one payment, one servicerA cash-out refi rolls everything into a single mortgage. Simpler to manage long-term.
You need a very large amount relative to the property valueCash-out refis can go to 80% LTV on the full property value, sometimes producing larger proceeds than a second mortgage at 85% CLTV.

Not Sure Which Equity Option Fits?

Mortgages by Channing will compare home equity loan, HELOC, and cash-out refinance for your specific situation, showing total cost, monthly payment, and which makes the most sense given your existing rate.

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Common Questions

Home Equity Loan FAQ

They're the same thing. A home equity loan is a type of second mortgage, it's secured by your home, sits behind the first mortgage in lien priority, and uses home equity as collateral. The term "second mortgage" is sometimes used interchangeably with both home equity loans and HELOCs, since both are second liens. When most people say "second mortgage," they typically mean a fixed-rate home equity loan.

Almost always, yes. Home equity loans are priced higher than first mortgages because they're second liens, in a foreclosure, the first mortgage holder is paid first, leaving second lien holders with more risk. Typical home equity loan rates run 1 to 3% above comparable first mortgage rates. However, they're still significantly lower than credit cards, personal loans, or most business financing, which is why using home equity for debt consolidation or large purchases can make strong financial sense.

It depends on your CLTV. If you already have a HELOC, that line is already counted as a second lien, even if you haven't drawn any funds. Adding a home equity loan on top would create a third lien, which most traditional lenders won't do. However, if you haven't drawn your HELOC and want to convert to a fixed-rate structure, closing the HELOC and opening a home equity loan is a clean alternative.

Typically 2 to 5 weeks from application to funding. The process includes credit review, income verification, appraisal, and title work. Like a first mortgage, the home equity loan requires a 3-business-day right of rescission on primary residences after closing, meaning funds aren't disbursed until day 4. On investment properties, funds typically disburse at closing.

Yes, most home equity loans have no prepayment penalty. You can make extra payments toward the principal at any time, which reduces your balance and shortens the effective term. Some lenders charge a small early payoff fee if the loan is paid off within the first 2 to 3 years; this varies by lender and Mortgages by Channing will disclose any such terms clearly before you close.

Both liens are paid from sale proceeds at closing, first mortgage first, then the home equity loan balance. The remaining equity after both payoffs is yours. You can't sell a property and transfer the home equity loan to the buyer; it must be paid off at closing.

Potentially, under specific conditions. Interest on a home equity loan may be deductible if the funds are used to buy, build, or substantially improve the home that secures the loan, and if you itemize deductions rather than taking the standard deduction. Interest on funds used for other purposes (debt consolidation, vacations, etc.) is generally not deductible under current tax law. Consult a tax advisor for your specific situation.

The Application

Apply From Your Phone In Fifteen Minutes

The whole application runs on your phone. Snap photos of your documents, connect your bank, and you're done. It reaches me the minute you submit it.

Starts with a soft credit check, so your score is never touched
We show you the payment before you commit to anything
Upload documents with your phone camera, no scanner needed
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If the numbers say wait, I'll tell you that too, and then we make a plan to fix whatever is in the way.

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