Home Equity Loans allows the borrower to make use of the value of his or her home as security against another loan. These types of loans are popular among many borrowers because it allows them to borrow much higher loan amounts and pay a much lower interest rate because of the safety that they bring.
Lenders who offer these types of loans will generally assume that you will have to pay back the loan to avoid losing your property and this is why they will charge lower interest rates. The amount of money you will be eligible for will be based on a few factors that include value of your property, credit history and income.
There are basically two types of Home Equity Loans namely the closed end credit which is normally a once off lump-sum payment with fixed interest and open end credit which is a revolving loan with variable interest rates . These are both sometimes called second mortgages because they are secured against a property.
Home Equity Loans offer an easy source of finance because they are a secured debt, and enjoy the benefit of being much lower than your first mortgage or credit cards charges. These loans however need to be taken responsibly, particularly if you know that you can afford to pay it back comfortably. You can use these loans for large financial obligations such as home renovations, expensive medical procedures, higher education expenses or even consolidating your debts.
The downfall of Home Equity Loans is that the borrower can make it a habit of going into a perpetual cycle of debt due to their seemingly all too easy access.There are various lenders who offer these types of loans including lenders such as BlueChip Finance, Ooba, NHI Finance, SA Home Loans and so on.