Function

• When you take out a mortgage, you get the entire amount up front. A home equity line of credit functions similar to a credit card: you take out a certain amount at a time and then make payments only on what you have used.
  
  

Uses

• A first mortgage is typically used to purchase the home. A second mortgage can be used to borrow additional money against your equity in the home. Home equity lines of credit can be used for whatever purpose you choose. Common purposes include college expenses and home improvements.
  
  

Tax Deductions

• The interest on the first $500,000 of your mortgage and the first $50,000 of home equity loan interest is deductible as an itemized deduction. These limits double if your filing status is married filing jointly.
  
  

Size

• Mortgages are usually limited to about 90 percent of the home's value, but some types like VA mortgages will allow you to borrow up to the full value of the home. If you take out a mortgage for more than 80 percent, you will have to pay extra for private mortgage insurance. Most home equity lines of credit cap your credit line at 80 percent, but in some cases the amount can be higher.
  
  

Repayments

• Mortgages have a fixed monthly payment. The amount you repay each month on a home equity line of credit is based on the amount of the credit line you have borrowed.