Home owners in the UK have access to another source of funds that they may not have known about or considered. It’s called a home equity loan and it can be used for emergency medical bills, paying off credit card debt, vacations, home repairs or just about anything else you need. This can be a valuable tool in your overall financial strategy provided that you understand what it is and how it works.
A home equity loan uses your home as collateral and allows you to borrow up to 100% of the value of your home – for example, if your home is worth £100,000 and you currently owe £40,000 then you would be able to borrow up to £60,000. The interest rate for your loan is based on your credit history and the length of the loan can range from 5 to 25 years. You need to be aware that there may be fees and taxes associated with a home equity loan, depending on your circumstances and location.
When you begin the application process, it is important to discus your options with your loan officer because each company has many different loan programs and some may be more appropriate for your needs than others. They should take the time to explain exactly what terms they are offering you as well as any other relevant information about the loan. You should also receive documentation on the loan to go over prior to actually endorsing the final loan.
As a home owner, you have one more tool to help in managing your finances. Now you don’t have to worry what you will do when unexpected expenses come up because you know that you have an option. So if you’re ready to get your credit card debt under control, make some home repairs or take a vacation, now is the time to look into a home equity loan.