You are a home owner. You have already mortgaged your house and
unfortunately you have again fallen in financial need. You want
a low rate secured loan, as you can't afford to pay heavy
installments against the loan. You need not take any kind of
stress as you can avail the benefits of a hom
e equity loan.
It allows you to borrow money, using you home's equity as
collateral. Home equity is also called as second mortgage
because in this case you mortgage the equity of your house for
the second time. For instance, if your unpaid mortgage balance
is, say 75% of the value of your house, you can take a home
equity loan on the remaining 25% of the value of your house.
This value that is not covered by the mortgage amount is known
as home equity.
The rates of interest on a hom
e equity loan are much lower than the rates on unsecured
loans. The monthly installments are also small and the repayment
period is long. So you can use it to pay off all your
outstanding debts in full and convert them into a single low
rate home equity loan.
A home equity loan can be used for a number of purposes.
It can be used for the renovation of your home. It can be used
as a business loan. Lenders are reluctant to provide business
loans, as the rate of failure of entrepreneurs is very high. A
home equity loan being a secured loan reduces the risk for
lenders so that they can offer such loans for business purposes.
Home equity loans are also suitable for people having a bad
credit history. Even if you have a poor credit background you
can avail a home equity loan that will help you avoid paying a
high rate of interest.
A home equity line of credit is another type of home equity
loans. It works more like a credit card because it has a
revolving balance. It allows you to borrow up to a certain
amount for the life of the loan -- a time limit set by the
lender. During that time, you can withdraw money, as you need
it. As you pay off the principal, you can use the credit again,
like a credit card.
About the author:
Author: The author is a business writer specializing in
finance and credit products and has written authoritative
articles on the finance industry. He has done his masters in
Business Administration and is currently assisting
Chance4finance as a finance specialist. For more information
please visit: http://www.chance4finance.
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