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Next important difference in HELOCs and you may second mortgage loans would be the fact HELOCs simply need one spend the money for notice towards financing for every single percentage, enabling the fresh borrower to choose once they pay back the primary. By contrast, 2nd mortgage loans realize a rigid amortization agenda in which for every percentage includes both notice and principal. Commercially, HELOCs offer a period of time, called a draw period, where the debtor is free of charge to expend only interest.