Why Would You Need a Home Equity Loan?

Sep 24, 2020

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Why Would You Need a Home Equity Loan?

Posted in : Financial Services on by : Josh

A Home Equity Loan means that you borrow/raise money against the ‘equity’ of your house and does not require you to sell your home. The Equity is the difference between the saleable value of your home and the loan you have against it.

As an example, say your property is valued at £150,000 and you have £50,000 remaining to pay on your mortgage, the equity is £100,000. If your home is paid off, then the equity would be £150,000. So, equity is basically what has already been paid for the property.

Home equity loans, are also known as a homeowner loan, it is secured against the value of your home and often used to consolidate debts or buy a car. An alternative is home mortgage refinancing, where you usually increase you mortgage, taking all or some of the extra borrowed cash. Be very cautious when securing additional debt against your home as it could be repossessed if you do not keep up the payments.