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The most common type of home equity loan is the term loan. This loan is put for a fixed amount of time, anywhere from five to 15 years. Such loans are typically granted for up to 80% of the value of the home, but some lenders will impart up to 125% of the home’s value.Is this type of loan right for you? The term loan plant best for those who need to borrow a fixed amount of money for a specific intent – gainful for a wedding, a home remodeling project, a fixed educational expense, or debt consolidation. This would give the borrower a fixed repayment schedule, where he or she would pay a set amount of money each calendar month for a specific clip period of time. An increasingly popular option to the home equity loan is a line of credit. This type of loan plant like a credit card, and have a rotating line of credit, in which the borrower may borrow against the principal more than once over the life of the loan. The borrower is usually given particular checks that he or she may utilize to compose checks against the loan amount. The borrower may borrow a small at a time, or borrow all of the loan amount at once. Unlike the term loan, the interest rate on lines of credit be givens to be variable. This type of loan plant best for recurring disbursals – a complicated remodeling undertaking accomplished in respective stages, or a recurring educational disbursal such as as annual tuition. Each type of loan have its advantages and disadvantages; you simply need to make up one's mind if you desire a fixed interest rate and fixed payments, or more than flexibleness in terms of when and how you pay. Your needs will determine which type of loan is best for you. Either way, under current Federal Soldier law, the interest on a second mortgage is deductible from your income taxes up to $100,000.