Home Equity Loans: Everything You Need To Know
Homes are one of the best as well as the most economic investment in the present mortgage environment. Owning a house or a property in this time takes a lot of money and most of the people get short of money in buying their actual desired home. At that moment home loans can be availed.
A home loan not only helps an individual in owning their desired property but many a times proves to bring much other kind of benefits along, like Tax benefits etc.
Home loans are basically a secured kind of loan and hence the interest rates are very low compared to the other kind of loans. Basically for a home loan, a property is to be given as guarantee. Hence, when we discuss about home loans, we should not forget about home Equity Loans.
Home Equity Loans
Home equity loans are those kinds of home loans that are given to the home loan seeker by keeping the home as collateral against the loan. Collateral can be termed as keeping the house as a security or guarantee. This guarantee assures the lender about the repayment of the home loan, if in case the borrower fails to repay the loan amount.
Equity can be defined as the difference in the amount or the value of the property and the total amount granted as home loan.
Categories of Home equity loan
The home equity loans are generally categorized into two main types. They are:
1. Close ended loans: These kinds of loans have a special scheme by which the borrower can take the full bulk amount at once. This amount will be equal to the value of the asset or the property taken as security. This amount is then to be repaid in a fixed tenure at affixed rate of interest, and at a fixed installment. These types of loans have a special scheme called second mortgage scheme.
2. HELOC or Home equity loan of credit: These kinds of home loans are given not in a bulk as in close ended loans. Rather in these kinds of loans, the borrower is allowed only to take the amount in installments. This is totally different from the close ended loans. Here the applicant is not allowed to keep the bulk amount with himself.
It is very much similar to the credit card accounts. The reason for this similarity is that both have a circling amount. The best part is that, it offers more flexibility to the home loan seekers.
Advantages of Home equity loans
It is the most convenient as well as stress free loan. And it is also widely chosen by the applicants. The reason for it to be most preferred one is that the loan is given on the account of the security.
The interest rates are very low compared to the other kind of loans and at the same time the date of repayment can be given by the borrower. This option is available with many less kind of homo loans. Besides, the terms and conditions for the usage of the money are very lenient.
Disadvantages
The main and the soul considerable drawback of these kinds of home loans are that if the loan is not repaid by the given time, the security is gone.
A home loan not only helps an individual in owning their desired property but many a times proves to bring much other kind of benefits along, like Tax benefits etc.
Home loans are basically a secured kind of loan and hence the interest rates are very low compared to the other kind of loans. Basically for a home loan, a property is to be given as guarantee. Hence, when we discuss about home loans, we should not forget about home Equity Loans.
Home Equity Loans
Home equity loans are those kinds of home loans that are given to the home loan seeker by keeping the home as collateral against the loan. Collateral can be termed as keeping the house as a security or guarantee. This guarantee assures the lender about the repayment of the home loan, if in case the borrower fails to repay the loan amount.
Equity can be defined as the difference in the amount or the value of the property and the total amount granted as home loan.
Categories of Home equity loan
The home equity loans are generally categorized into two main types. They are:
1. Close ended loans: These kinds of loans have a special scheme by which the borrower can take the full bulk amount at once. This amount will be equal to the value of the asset or the property taken as security. This amount is then to be repaid in a fixed tenure at affixed rate of interest, and at a fixed installment. These types of loans have a special scheme called second mortgage scheme.
2. HELOC or Home equity loan of credit: These kinds of home loans are given not in a bulk as in close ended loans. Rather in these kinds of loans, the borrower is allowed only to take the amount in installments. This is totally different from the close ended loans. Here the applicant is not allowed to keep the bulk amount with himself.
It is very much similar to the credit card accounts. The reason for this similarity is that both have a circling amount. The best part is that, it offers more flexibility to the home loan seekers.
Advantages of Home equity loans
It is the most convenient as well as stress free loan. And it is also widely chosen by the applicants. The reason for it to be most preferred one is that the loan is given on the account of the security.
The interest rates are very low compared to the other kind of loans and at the same time the date of repayment can be given by the borrower. This option is available with many less kind of homo loans. Besides, the terms and conditions for the usage of the money are very lenient.
Disadvantages
The main and the soul considerable drawback of these kinds of home loans are that if the loan is not repaid by the given time, the security is gone.