A home equity loan is where the borrower provides his home equity as collateral for the loan. The equity of the home is determined by the market price of the house, not including physical possessions. Home equity loans are typically used for major purchases, like medical bills, tuition, or home repairs.
If you are a homeowner, the ‘equity’ you have in your home refers to the difference between the amount you still owe and the market value of the home. The more of your mortgage you’ve been able to pay down, the more equity you have available to you.