The typical home equity line is tied to the prime rate index which is added to a fixed margin (determined by both a borrower's equity and credit). A home equity borrower is provided with a credit account that is applied against their home equity (typical credit lines range from $50,000-$200,000) from which they will have check writing privileges. The loan term is usually between 15 to 25 years; the draw period occurring within the initial 10 to 15 years and the repayment period occurring in the remaining loan term. The borrower pays interest only on money that is borrowed (drawn against the account) and not on the unused balance on the home equity line. Therefore the loan balance of a home equity line fluctuates based upon the periodic draws and repayments on the account. Also see Anatomy of an Adjustable Rate appearing on our website.