What are Home Equity Loans Used For?

Home Equity Loans allow you to borrow/raise money, against the ‘equity’ of your home without having to sell it. Equity is the difference between the saleable value of your home and the amount left on the loan you have against it. For example, if your property is valued at £150,000 and you have £50,000 left to pay on your mortgage, the equity is £100,000. If your home is paid off, then the equity would be £150,000. So, equity is basically what has already been paid for the property.

A home equity loan, also known as a homeowner loan, is secured against the value of your home and is often used to consolidate debts or buy a car. An alternative is home mortgage refinancing, where you usually increase you mortgage, taking all or some of the extra borrowed cash. You should be cautious when securing additional debt against your home as it could be repossessed if you do not keep up the payments.

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