A second-lien HELOC or home equity loan can let you borrow against your home while leaving your first mortgage in place. Whether that works for you depends on your equity, qualifications and repayment plan.
Start with the amount you need.
Your existing mortgage and new borrowing serve different purposes. Write down the amount you want to access, what it will fund and how quickly you expect to repay it. Then ask for the combined monthly obligation—not just the new loan's payment.
Understand the combined balance.
Combined loan-to-value compares all loans secured by the home with the property's value. In a hypothetical example, a $400,000 first mortgage plus a $50,000 second loan on a $600,000 home is 75% combined loan-to-value. That calculation does not establish eligibility or an available lending limit.
Explore the numbers with the equity planning calculator →
Compare the tradeoffs.
A HELOC may provide access to funds during a draw period, while a home equity loan generally provides a lump sum. Some lines require a full initial draw. Ask about variable rates, introductory terms, fees and the transition to repayment. Your home secures the borrowing.
Keeping the first mortgage does not automatically make a second loan less expensive. Compare the amount borrowed, fees, combined payments and total cost over your expected repayment period.
Think about a future refinance.
A HELOC can complicate refinancing the first mortgage. The line's lender may need to approve remaining in a subordinate position, or the line may need to be paid off. Discuss this if you expect to refinance or sell soon.
Source: CFPB guidance on HELOCs and refinancing
Bring these questions to a conversation.
- How much will both loans cost each month?
- Can the new payment change, and when?
- What are the closing, annual or early-closure costs?
- How much equity would remain after borrowing?