What is a home equity loan?

Are you a property owner looking for a load of money? As a property owner, a home equity loan is an option you may explore.

No matter what the purpose of the funds, if your home is worth more than the outstanding balance owed, a home equity loan is something you can consider. You may wish to upgrade your current home, or even put down a deposit on that investment property you have been thinking about.

The use of home equity loans is vast among those looking to expand their property portfolio, here are some major advantages:

  1. Easier approval due to a previous endorsement and history with the lender.
  2. Low rates make this product highly attractive to consumers as well, as home equity loans, which are secured, minimise borrowing costs, unlike unsecured loans.
  3. Borrowers can qualify for significantly larger amounts then they would be approved for without the security of a home, which is what makes this product so appealing for investors

Safe for lenders

Home equity loan is very advantageous due to being the safest products on offer by lenders.

If due to unforeseen circumstances, you are unable to pay the repayments, the bank can recover any unpaid funds through selling your property. This is obviously worst case scenario. However, this means as the funds are easily recovered lenders are safe to lend you the money through a home equity loan. Through the advice of our home loan experts who have years of experience in the field, we aim to eliminate this threat however and provide you with assurance and peace of mind.

Lump sum and line of credit

Within a home equity loan, there is two options available for consumers to choose between: a lump-sum and a line of credit.

They are similar but tailored differently for separate needs. Lump-sum home equity loans are exactly how they sound. You are provided with a considerable sum of money upfront and repay the loan within a fixed period through monthly repayments. Interest rates can be set fixed or variable, which is where we will assist in making the correct decision by assessing the financial environment.

Compared to a lump sum loan where you apply for a set figure, a home equity line of credit (HELOC) approves you with a maximum amount of available credit, and you simply borrow as you need. You can borrow gradually from the line of credit as required, and reimburse through minor payments or abolish the loan you must make fully amortising payments.

After outlining the advantages, you must be aware of the dangers home equity loans possess which we will outline to you. A major pitfall of those who opt for home equity loans is if the funds are abused and not used for home improvements or investments. This would be wasteful of your equity, the best way to capitalise on this product is to be mindful, and smart with your money and put it towards growing more equity.

Not only will our team of home loan experts be with you every step of the way, we care about the outcome as we pride ourselves on achieving the best possible result for our clients. Your success is our success right, so supporting you to make the best financial decisions for you and your needs is the of the utmost importance. For home equity loans, we will consider if it is the right option for you, tailor the most appropriate product and find the best lender suited to that product.