A home equity loan is a second mortgage, you take a new credit against your home’s equity. Your lender uses your house as collateral for a new loan, so it can be foreclosed in case you fail to repay money.
To take a second mortgage you need to have enough equity built already. This means that the more you have already paid to cover the mortgage, the more you can borrow now. As you possess just some part of the house you have already paid off, only this equity can be used as collateral.
This type of loans is attractive to the people with less than perfect credit history. The lenders tend to give money, if you use your house as collateral. This decreases their risk. You can also get quite a low interest rate for a home equity loan, while borrowing large amounts of money.