What are Home Equity Loans Used For?

Posted on January 2, 2021 at 9:20 am

If you are considering looking into a Home Equity Loan, it is good to learn as much as you can about it first and do your research. Home Equity Loans are for borrowing money against the ‘equity’ of your home without requiring that you sell your house. Equity is the difference between the saleable value of your home and the home loan you have against it.

For example, say your property is valued at £150,000 and you have £50,000 remaining 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.

Home equity loans, are also known as a homeowner loan, it is secured against the value of your home and 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. Be very 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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