Only our home brings us some happiness in life. Our home is the safest ever place for family time. Many times some situation occurs when you need loans like for your business. That time your home helps you to get a loan instantly without any problems. You can get a loan by using your home value as equity.
Some times due to some financial problems you pay your existing loan lately, It results in bad credit score. A bad credit score creates a problem in getting new loans. As lending providers focus mostly on credit score to provide any type of loans to users. So, you get the problem to get a loan in such a situation.
What is Home equity Loan?
The only way to get a new loan is your home. A home equity loan is given upon the market value of your home. Our home is also key to the most reliable future than any other property. It helps you to get funds any time in any emergency financial circumstance.
Almost more than 70% of users don’t know they can get a loan by using their home stake. Even if you have some debt, you can still get a loan up to value minus your debt on your total home market value. Such loan is known as a Home equity loan.
For example, you own a home worth 2,00,000$ and have a debt of 50,000$ for another loan. So, you have still 1,50,000$ worth home equity. You can get loan up to 1,20,000$.
Your home is kept as security when you take home equity loan. You can get a loan of up to 70-80% equal amount of your home total market value. Equity means property stakes value calculated by the market value of a home. If you fail to pay your loan debt, you can lose your home.
Home equity loan has a lower rate than any other loans like personal loans, business loan. Even tax is deducted from your loan interest rate. Only you need a good stake amount in your home in order to qualify for a home equity loan. Before taking a home equity loan, check out your home market value, credit score so that you can get an idea of how much amount you can get for a loan.
There are two types of home equity: 1. Standard home equity loan and 2. HELOC
Standard home equity loan allows borrowing some fixed amount of money and payback in a specific time span.
HELOC(home equity line of credit) allows borrowing money as we want according to home value at any time like a credit card.
Advantage of home equity loan:
Home equity provides a number of advantages over other types of loans:
- It has a lower loan rate than another type of loans
- Spend money anywhere
- Tax-deductible interest rate
- Longer repayment period
- Can provide large sum amount in a short time
- It is secured loan
A home equity loan is best suitable to those want to get a big amount as loan and also have a good income source.