| p>Home equity loans are fixed rate home loans that | | | | best rate loan) as the lender has the guarantee that |
| allow you to tap into the money (equity) you've already | | | | you can pay the loan back because of the equity in |
| invested in your home to finance debts or other | | | | your property. |
| purposes at a lower interest rate than most revolving | | | | Although a home equity loan has many benefits you |
| credit options. | | | | should also be cautious before taking out such a loan. |
| With house valuations increasing considerably over the | | | | Because it is still a secured loan with the property as |
| last 10 years many UK homeowners are unaware of | | | | collateral, a Home Equity Loan generally has lower |
| equity loans as a way of raising finance. | | | | interest rates. For the same reason, Home Equity |
| For example if you are a homeowner with a house | | | | Loans can be risky, because if you default on |
| valued at £300,000 and you have an | | | | payments then you put the property at risk of |
| outstanding mortgage of say £100,000 you can | | | | foreclosure. The homeowner must also be prepared |
| use the difference of £200,000 as equity to | | | | to pay off the loan balance when the house is sold. |
| take out a loan. A Home Equity Loan can be really | | | | Some lenders have stopped offering home-equity lines |
| useful if your existing mortgage lender will apply a | | | | of credit and home-equity loans altogether, even to |
| redemption penalty if you wish to change your current | | | | borrowers with good credit. And lenders that still offer |
| mortgage. If you don't want to pay this penalty a | | | | these types of loans are being a lot more selective. |
| remortgage will not be possible so a home equity loan, | | | | The lenders that have cut back on home-equity loans |
| which is independent of your original mortgage | | | | and credit lines are mainly those that raise money by |
| company, is a viable option. | | | | selling the loans to investors. And since the recent |
| Taking out a home equity loan online from is a much | | | | issues with sub-prime loans the lenders are being extra |
| better option than selling your home to get the money. | | | | cautious about offering these types of loans. |
| If you sell your home, you will be left with a lump sum | | | | Conclusion |
| of cash after paying off your mortgage. A home | | | | An equity loan may not always be the best solution to |
| equity loan allows you to get that cash without selling | | | | all of your financial problems. However a home equity |
| your home. | | | | loan can become an important part of short-term |
| One of the main benefits of the home equity loan | | | | financial planning. And, once the loan is paid, you'll have |
| which sets it apart from other loans is with this kind of | | | | the satisfaction of knowing that you've once again |
| loan the interest rate is likely to be lower (if not the | | | | proven your credit worthiness. |