Equity Home Loans | What are equity home loans?

What are Equity Home Loans?

Equity home loans are a type of loan that involves a borrower using the equity in their house as a means of collateral.

Equity home loans can be useful in helping home owners finance huge or major house expenses like medical bills, college education or house repairs.

equity home loans
Equity Home loans - How to use equity in as a means of collateral...

Equity home loans or otherwise known as home equity loan creates a form of a lien against loaner’s home and therefore slash or decrease the actual equity home.

Also lenders and other lending institutions feels much safer with equity home loans because with your house being collateral you can’t easily hide and disappear as your home won’t vanished.

That means the lender has a much better chance of ensuring the borrower pays any mortgage owed.

Also lenders have a better chance of getting back collateral in the form of a house in case borrower wasn’t able to meet and follow provisions of mortgage contract.

Equity home loans may be referred as second tier liens or second trust deed, but they can still be assumed in first or a third position.

A lot of equity home loans needs a very good credit history or acceptable combined value from loan and reasonable value from loan rations. It also comes in dual types namely the open end and closed end.

In Australia, some equity home loans interest are deducted from an individual’s personal rate of their income taxes.

Here are some advantages of using equity home loans from the other kinds of home mortgage set ups because equity home loans remain an attractive option for many borrowers for these simple reasons:

  • Usually have a much lower APR or interest rate
  • Can be quicker to get even if you have a bad credit history
  • Payments made on equity home loans may become tax deductible
  • Borrowers have more chances of availing themselves a much bigger loan amount with this kind of loan.

Some tips to maximize your equity home loans:

To have this deal ending up working to your benefit, make sure it is the correct kind of loan to fit your financial structure.

What if an equity home loan makes better sense to meet your financial needs compared to lets say a credit card account? If yes, this may be the right kind of loan to utilise.

More importantly plan all your existing budget right away, make sure any loan you will avail will not put more burden in yourself.

Paying the premiums every month and not totally up front will also help you take advantage of equity home loans.

Equity Home Loans

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3 thoughts on “Equity Home Loans | What are equity home loans?”

  1. A baby boy recently entered our lives and prior to his birth, we had a bit of credit card debt that should have been taken care of but wasn’t. My wife is now working part-time instead of full-time, which has been really rough. Our debt is not getting any better.

    We borrowed money from immediate family to purchase our home so the loan is a low APR and is not technically on our credit. We still need to consolidate our debt (credit cards, vehicle loans, etc…) but not sure what route to take. It sounds like a Home Equity Loan is the best choice since the APR is usually fixed and is like a typcial loan.

    Do you have any suggestions for us? We do not want to damage our credit so we need to make the best choice.


  2. I’m in a housing nightmare at the moment. My husband is in the Navy and deployed; we have three young children (5, 4 and 6 months) who had been severely sick all winter. Husband said I should get someone out to check the house. To make a long story short, the house had/has mold in it. Insurance covered the bathroom; the pipe from outside leaked but it also turned out it was not SEALED. This was not noted in the inspection before buying the home. We also have single-paned windows and we live in Queensland so the windows have had a condensation problem since we moved in. We have $9,000 in savings but if there is more mold within the house, we don’t know if we will be able to afford fixing it. My husband has acquired a lot of credit card debt; he is not the best at finances, apparently. This was a secret to me. We got a $20,000 home equity loan about 5 years ago; we used it to remodel the kitchen, re-do the doors and carpet within our house. I wanted to have the windows done but my husband decided against it. We had no idea about the mold. What can I possibly do now? We can’t lose the house or my husband will lose his security clearance and then we will be completely ruined. Feeling really helpless and hopeless right now. Is there any way we can pay off our credit card debt and then refinance our home equity loan? Everything I’ve read says that no one is giving out third loans anymore due to the amount of foreclosures. That is NOT an option for us; we might need more money than 9 grand. I’ve already talked to a solicitor and financial adviser and they basically don’t know what to tell me.

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