What is the difference between Protected-equity loan vs Equity loan?
In simple terms : Equity Loan is money borrowed from the bank to buy assets which can be houses , shares etc Protected equity loan is commonly used in shares where you have a portfolio of shares and you set the minimum value the portfolio can fall to . Anything less than there may result in a sell off of the share to protect you from further capital losses.  This is a very brief explaination , which does not fully cover what Equity Loan && Protected Equity Loan really mean
"Many thanks for thedetailed  response, appreciate it. But I am still not clear on the distinction between a public company and the equity holders. Isn't a public company = shareholders + equity holders? Or do you mean ""company"" = shareholders+equity holders + debt holders?" Though I have never had construction loan, for a regular loan this clause only covers the period between when you submit the forms, and when you close on the loan. Normally the construction loan is converted into a regular mortgage after the home is completed. The lender wants to make sure that you don't do anything that will make it impossible for the loans to close.  They are concerned about new or enlarged loans. They also care about spending the down payment money on something else. When I was selling my condo, the purchaser bought a new car the week before closing. That made closing very interesting. This is a very common misconception. I've been studying equities and credits for a while now, and the simplest way to explain the difference is this:  - Credit is about stable cash flows. Your investment in a bond has almost (read: almost) nothing to do with growth rate. It has everything to do with how stable the cash flows are and interest coverage.  - Equity is about growth. No wonder companies with highly irregular cash flows (e.g., every single young tech company in the history of tech companies) can have the most in-demand equity while few bond investors would touch them with a ten foot pole. I am not a structured products expert, just relaying what's in the article, but I'd imagine it includes a larger equity tranche in the structured product, thereby giving more cushion against losses to the actual debt investors in the tranches above it in the payment water fall. You should look into a home equity line of credit: A home equity line of credit (often called HELOC and pronounced HEE-lock) is a loan in which the lender agrees to lend a maximum amount within an agreed period (called a term), where the collateral is the borrower's equity in his/her house. Because a home often is a consumer's most valuable asset, many homeowners use home equity credit lines only for major items, such as education, home improvements, or medical bills, and choose not to use them for day-to-day expenses. I don't see how it makes a difference?    Setup a futures contract for 33 times more than you have the capital to support and write it as confirmed income, slot it into your balance sheet and then borrow against it.  It's fundamentally no different to the example from the OP, it's just a different way of reaching it. "Residential mortgages normally explicitly state that the property cannot be let without explicit permission, whereas BTL mortgages typically require that the property be let. There are other differences. Residential mortgages are regulated, which means that consumers have a degree of protection from mis-selling; most BTLs are not, as landlords are expected to know what they're doing. Affordability of residential mortgages are based on your income, since that is how you are going to pay for them. BTLs are (mostly) assessed based on the property's rental income, since it's that that will fund the mortgage. Finally, residential mortgages are typically done on a repayment basis, so that at the end of the term, you've paid off the entire loan, whereas BTLs are typically interest-only, on the assumption that you'll either sell the property, or remortgage, at the end of the term. (I've used words like ""typically"" a lot to give an overall picture of the differences. Obviously it's a bit more complicated than that, and there are exceptions to a lot of the above descriptions.)" Thanks for that, it did help.   I think my issue is I don't work in finance itself, I'm a lawyer, and 'capital' generally has a very specific meaning in English company law, where it refers exclusively to shareholder capital.   I realise capital in finance terms includes both debt and equity investment. "The part that I find confusing is the loan/stock hybridization.  Why would the investor be entitled to a 30% share if he's also expecting to be getting paid back in full? This is the part that's making me scratch my head.  I can understand giving equity and buying out later.  I can understand giving equity with no expectation of loan repayment.  I can understand loan repayment without equity.  I can even understand collateralizing the loan with equity.  I can not understand how ""zeroing out"" the loan still leaves him with a claim on 30% of the equity. Would this be more of a good will gesture as a way to thank the investor for taking a chance?  Please forgive any naivety in my questions." Another thing to consider is that paying extra principal (either via one of these services, or by including something extra with your normal mortgage payment and designating that it go to principal rather than be held to reduce next month's payment, or just sending an additional payment to the bank and designating it as reducing the principal) shortens the term of your loan. Is this good? Maybe. Consider that banks lend with a variety of terms. Usually the 15-year fixed rate mortgage has a lower interest rate than the 30-year fixed-rate mortgage, and the 5-year home-equity-loan has an even lower rate. When you prepay your loan, your interest rate stays the same, but the bank gets its money back sooner. This makes more profit for the bank as it can then invest the money in other things. That profit could have been yours if you had made that investment instead of prepaying your mortgage. You'll be taxed when you sell the house, but not before that (or if you do some other transaction that realizes the gain, talk to your real estate attorney or accountant for more details). A Home Equity line-of-credit is simply a secured loan: it's a loan, conditioned on if you fail to pay it back, they have a lien on your house (and may be able to force you to sell it to pay the loan back). Equity means having ownership, and I think that's a REALLY bad idea in the scenario that you described.  If you stay together, there's really no upside to either of you in this scheme.  If you break-up then you'll have a terrible mess, especially if the break-up goes badly.  If she's really building equity, you're going to be faced with several hard questions: If this went bad at the end, it might be worse than a divorce in some sense since at least in the divorce you have established law to sort out the issues.  You'll be on your own here without a formal contract. (Marriage being a special case of a contract for our purposes here.) If she wants to share costs (which seems perfectly fair) then agree to rent and a split on utilities.  If you really insist on going down the path that you described, I think that you'll need some sort of contract, which probably involves a lawyer.  Anything short of that could not be considered having equity at all and will be completely unenforceable in the event of a bad break-up. (There is some notion of a verbal contract, but that's very hard to prove and subject to misunderstanding and misremembering.) Aside from all of these potential problems in event of a break-up, you would probably also be violating the terms of your mortgage, if you have one. From the bank's perspective, you are selling the property that is the collateral for that loan, which you're almost surely not allowed to do. Generally, the answer is as follows:  If there is a legal obligation to pay cash flow (including the possibility of court determined restructuring), then it is debt.  If the asset owner is not guaranteed any cash flow,  but instead owns the *residual* cash flow from the operations of the business (I.e. the cash flow left-over), then it is equity. In finance you are taught that debt financing is cheaper than equity financing.  Also to improve your credit rating, showing that you can carry debt responsibly and pay it off without a hitch sends dog whistle that the corporation is operating well. "The main disadvantage is that interest rates are higher for the interest-only loan. It's higher risk to the bank, since the principal outstanding is higher for longer.  According to the New York Times, ""Interest rates are usually an eighth- to a half-percentage point higher than on fully amortized jumbo loans."" They're also tougher to qualify for, and fewer lenders offer them, again due to the risk to the bank. Since you can always put extra towards the principal, strictly speaking, these are the only  downsides. The upside, of course, is that you can make a lower payment each month. The question is what are you doing with this? If this is the only way you can afford the payments, there's a good chance the house is too expensive for you. You're not building equity in the home, and you have the risk of being underwater if the house price goes down. If you're using the money for other things, or you have variable income, it might be a different story. For the former, reinvesting in a business you own might be a reason, if you're cognizant of the risks. For the latter, salespeople on commission, or financial industry types who get most of their income in bonuses, can benefit from the flexibility."