Home Equity Loans: Funds Against Your Valuable Collateral
by Johns TielEquity refers to the worth of your home after subtracting the outstanding mortgages and unpaid debts. The home equity loans are the loans that are acquired against equity in our home. The equity acts as collateral against the loan. The loan amount is calculated after deducting all outstanding debts and unpaid balances due from current market value of house.
Borrowers can use home equity loans for innumerable purposes. The loan amount can be used for various purposes such as:-
• Medical bills
• Education
• Major repairs
• Buying car
• Debt consolidation
Home equity loans have benefits such as you can take a loan amount up to 100% of the equity. The loan amount offered may range from £3000 to £100000 depending on the equity. The repayment term has to be met within 5-25 years. The interest rates on home equity loans are low and tax deductible for the convenience of borrowers.
Home equity loans are classified as:-
1. Closed end home equity loans
Closed end loans are a one time lump sum loan. The borrowers receive a lump sum at the time of closing and cannot borrow further. These loans carry a fixed rate of interest which remains constant throughout the term.
2. Open end or home equity line of credit
Open end loans adjustable rate loans and borrower is given a line of credit. This means that a borrower can borrow an agreed amount whenever he requires. The rates fluctuate with the market rates.
Home equity loans can be availed by borrowers with bad credit status as well. The bad credit history results due to CCJs, IVA, bankruptcy, arrears and late payments.
Home equity loans provide you with adequate funds to accomplish any of your needs effectively. The flexible terms and low interest rates make it the most suitable option for borrowers.