The first thing we should know about this type of credit is that they require owning a house, an apartment or a premises, since it will be what acts as a guarantee of payment. The fact that there is a property involved is what allows access to high loan amounts. The problem, on the other hand, is that in the event of non-payment, the lender would keep the house as property to collect the outstanding debt. For this reason, it is always recommended that before requesting a home equity loan, you should be certain that you will be able to meet the resulting installment obligation.
The Benefits
There are several benefits to obtaining a home equity loan and these include:
- High loan amounts; depending on the equity in the home and in comparison to conventional loans
- Financing with terms of up to 15 years
- Free availability of credit that allows you to have large amounts of money by leaving a property as collateral
- You can make advance payments to shorten the term of the loan or the monthly payment.
- Lower interest rate in comparison to other traditional loans
Keep in mind that the maximum loan amount is up to 80% of the property’s value. The loan amount, installments and term will be subject to credit evaluation.
The Homeowner
If you are a homeowner and you need to obtain a high amount of financing, either to invest in your business, expand your property or fulfill family projects, an option to consider is loans with home equity. Home equity loans involve a guarantee that will be mortgaged in favor of the bank or financial institution.
Conclusion
The home equity loan gives you leverage to use the amount for increasing your wealth; among other things discussed. Think carefully before you apply for this type of loan and what you will use it for.
