A traditional second mortgage gives you a set amount of money, which is paid back over time or due in full by a certain date, and the rates are usually fixed. A home equity line of credit usually has variable rates and you can borrow as needed, in the amounts you need.

The APR is also calculated differently for each: For a second mortgage, the APR calculation factors in the interest rate, points, finance charges and other fees, while a home equity line’s APR is calculated only using the periodic interest rate.