Home Equity Loan: Reap the Advantage of Equity

by : Dina Wilson

The equity that your home possesses is a great asset to you. Its value is understood only when you are short of cash and in need of money to meet necessary expenditures. Against it you can get a Home Equity Loan.

To begin with, the equity of a home is the market value of the home minus the outstanding dues on the house. This loan is a kind of secured loan where the equity of the house is kept as collateral.

You can avail two schemes under this loan - closed end home equity loan and home equity line of credit (HELOC). The first option provides you a one time big amount at the time of taking the loan. The interest is calculated on the total amount. The second option is more like a credit card. Depending on a predetermined withdrawal limit, you can borrow amounts according to your needs. The advantage of this option is that the interest is charged on the amount withdrawn and not on the total amount.

In home equity loan you can borrow an amount in the range of ?5000 to ?75000, depending on the value of the equity. Some lenders even offer up to 80 percent of equity as loan. The repayment term of this loan ranges from 5 to 25 years.

There are many merits of home equity loan. The interest rate is tax deductible and is cheap due to the secured nature of the loan. You can borrow money according to your need and can fetch a large amount. Also you will have a longer period to pay off the loan easily.

You can utilize the loan according to your wish. You can spend it on education of medical fees, on home improvements, buying cars or on a holiday tour. Moreover, if you have a bad credit history, you can still get this loan at better terms. All you have to do is to research thoroughly.

You can go online to find home equity loan fast and in a hassle free manner. You can get quotes form different lenders and compare them before settling for a suitable one.