Finance >> Home Equity Loan

Home Equity Loan

Bank on your home during crisis.

You own a beautiful house in a posh location where you live with your family in peace. You take pride in owning a sweet home. There is another reason for which you can be proud about your home and the reason is Home Equity Loan. By taking a home equity loan against your house you can meet any financial crisis, whenever they arise. Not only this, you can also pay up your high interest loans and credit card bills and in turn save money and manage your finances in a better way.

For those who don’t know, a Home Equity Loan as the name implies is provided against the equity in your house. Such a loan is also known as a second mortgage as you again mortgage the equity available in your house. Equity is the value left in your home after subtracting the mortgage value (in case you have a mortgage running) from the present market value of your home. For example, if you have an unpaid Mortgage Loan of £30000 and the existing worth of your home is £50000, then in that case you can apply for Home Equity Loan up to £20000. But, you should remember that you have to pledge your home as collateral which the lender can take over, in the event of non-payment of monthly instalments.

The greatest benefit offered by Home Equity Loan is that they bear a low rate of interests and a longer repayment period when compared with unsecured loans like Personal Loans etc. The lower interest rate and longer time frame allows you to pay low monthly instalments thus helping you to come out of the financial crisis soon. That’s why loan experts advise you to consider Home Equity Loan over other forms of credit.

Home Equity Loan can be taken for a variety of reasons. It can be used to fund your child’s college or to buy a piece of land. You can also avail it to use the money in your business. People who suffer from bad credit history can especially benefit as the approval for such loans is easy. Lenders are assured that they will get their money back and therefore provide Home Equity Loan to people with low credit score.

Borrowers must exercise caution while considering availing for Home Equity Loan. As they have to put their home as collateral therefore they need to take an amount which they are confident of repaying. Secondly, as the lending market is very competitive with each lender offering different interest rates therefore they need to select the best plan. There are many financial institutions like banks and credit organizations which offer Home Equity Loan and hence finding the best loan as per the requirements is very easy. All it needs is some smart work!