Merchants Bank offers two types of loans that use the equity in your home as collateral: a Home Equity Line of Credit (or HELOC) and a Second Mortgage (also known as a Home Equity Loan). Each works differently and which loan type is best for you will often be determined by your purpose for taking out the loan.

Home Equity Line of Credit

A Home Equity Line of Credit (HELOC)* is a revolving loan that works very much like a credit card. The equity you have in your home secures a credit line with a variable interest rate. The monthly payments are determined by how much money you owe the Bank, not by how big the line of credit is. As you pay down the amount you owe on your line of credit, the rest of the credit line is available for other uses. 

Benefits of a HELOC include:

  • Low interest rate with an introductory APR as low as 2.9% for the first 6 months and 4.00% APR after 6 months.*
  • Flexibility to borrow for anything -- a new car, college tuition, a vacation, home improvement project or any other need.
  • Convenient access to funds when you choose.
  • Potential tax advantages on the interest paid on a HELOC. Consult your tax advisor for more information.
  • Local service from your local Merchants Bank branch.

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Second Mortgage

A Second Mortgage , or Home Equity Loan, is simply borrowing money, using the equity in your home to secure the loan, much as a personal loan may use the value of a car to secure the loan. 

Options for your Second Mortgage:

  • A Balloon Loan offers a variety of amortization schedules with flexible monthly payments to fit any budget. 
  • An Installment Loan has a fixed repayment schedule over a certain length of time. 
  • An Adjustable Rate Second Mortgage (ARM)  offers an adjustable rate. 

Second mortgages also offer potential tax advantages on interest paid. Consult your tax advisor for more information.

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Frequently Asked Questions


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Add the amount you want to borrow to the unpaid balance of your mortgage then divide that number by the appraised value of your home. The result will be a percentage that is referred to as the Loan-to-Value of your home. The lower the percentage, the lower your interest rate may be.

While some mortgage lenders offer loans that often will go as high as 125% of your home’s value, we don’t think it’s a good idea. Borrowing in that manner will make it difficult, if not impossible, to sell your home should you want, or need to move. 

We’re not tax advisors, but the interest you pay on a Home Equity Loan or Home Equity Line of Credit is often deductible on your federal tax return. The interest you pay on car loans, credit cards and almost all other loans definitely is not. We suggest you consult your tax advisor regarding interest deductibility. 

* Subject to credit approval. As of June 15, 2017, the Annual Percentage Rate on a home equity line of credit with an 80% or less loan-to-value and a credit score greater than or equal to 700 was 4.00%. This special offer has fixed-rate pricing as low as 2.9% APR for the first six months, based on relationship reward discounts. Following that six-month period, the rate will become variable, subject to change, based on U.S. Bank, N.A., prime rate plus a margin that is determined based on the loan-to-value in your home and your credit score at the time of application. Current rates vary from 4.00% to 6.75% APR. Maximum possible APR is 18%. Minimum possible APR is 4.00% An origination fee may apply, in addition, you are responsible for certain fees to third parties, such as appraisers, credit reporting firms and government agencies, which are generally from $100–$1,000. Following the first year, there will be an annual fee of $25. Offer available on new home equity lines of $10,000 or more only or on existing lines of credit with an increase of at least $10,000. Consult your tax advisor regarding the deductibility of interest expense. Property insurance will be required. Limited time offer.