A Home Equity Line of Credit (HELOC) and a Home Equity Loan both allow you to borrow against the equity in your home, but they function differently. A HELOC works similarly to a credit card where you have a credit limit and you can borrow as much as you need, up to that limit, during the draw period. You pay interest only on the amount you borrow. Conversely, a Home Equity Loan provides you with a lump sum of money upfront, and you repay the loan with fixed monthly payments over a set term.