home equity loan: meaning, definition, pronunciation and examples
MediumFormal, Financial, Technical
Quick answer
What does “home equity loan” mean?
A type of loan in which the borrower uses the equity of their home as collateral.
Audio
Pronunciation
Definition
Meaning and Definition
A type of loan in which the borrower uses the equity of their home as collateral.
A secured loan that allows homeowners to borrow money against the value of their property, calculated as the current market value minus any outstanding mortgage balance. It is typically used for major expenses like home improvements, debt consolidation, or education.
Dialectal Variation
British vs American Usage
Differences
The term is used in both varieties, but the specific financial product structures and regulations may differ. In the UK, similar products are often marketed as 'secured loans' or 'second charge mortgages'.
Connotations
In both regions, it carries connotations of financial planning, leveraging asset value, and potential risk to home ownership.
Frequency
More frequently used in American English due to the prevalence and specific branding of this product in the US financial market.
Grammar
How to Use “home equity loan” in a Sentence
[Subject] took out a home equity loan to [purpose].A home equity loan is secured against [property].Vocabulary
Collocations
Examples
Examples of “home equity loan” in a Sentence
adjective
British English
- The home-equity-loan market is quite active.
- They discussed home-equity-loan options.
American English
- The home equity loan market is quite active.
- They discussed home equity loan options.
Usage
Meaning in Context
Business
Used in banking, real estate, and personal finance to describe a specific lending product.
Academic
Appears in economics, finance, and law papers discussing consumer debt, housing markets, and financial instruments.
Everyday
Used by homeowners considering borrowing against their property's value for large expenses.
Technical
Precise term in mortgage lending, with specific legal and regulatory definitions regarding lien priority and loan-to-value ratios.
Vocabulary
Synonyms of “home equity loan”
Strong
Neutral
Weak
Vocabulary
Antonyms of “home equity loan”
Watch out
Common Mistakes When Using “home equity loan”
- Confusing it with a 'home loan' (which is a primary mortgage).
- Using 'home equity' as a verb (e.g., 'We will home equity the house').
FAQ
Frequently Asked Questions
Essentially, yes. A home equity loan is a common type of second mortgage, as it places a second lien on the property behind the primary mortgage.
It can be used for various purposes, including home renovations, debt consolidation, funding education, or covering major medical expenses.
The primary risk is foreclosure. If you fail to repay the loan, the lender can seize your home because it is used as collateral.
Home equity is calculated by taking the current market value of your home and subtracting the amount you still owe on your primary mortgage and any other liens.
A type of loan in which the borrower uses the equity of their home as collateral.
Home equity loan is usually formal, financial, technical in register.
Home equity loan: in British English it is pronounced /ˌhəʊm ˈek.wɪ.ti ˌləʊn/, and in American English it is pronounced /ˌhoʊm ˈek.wə.t̬i ˌloʊn/. Tap the audio buttons above to hear it.
Phrases
Idioms & Phrases
- “Tapping into your home's equity”
Learning
Memory Aids
Mnemonic
HOME is your house, EQUITY is the part you own, LOAN is the money you borrow using that owned part as a promise to pay back.
Conceptual Metaphor
A home is a piggy bank (you can break it open to get cash).
Practice
Quiz
What is the primary collateral for a home equity loan?