Before we discuss about the advantages of home equity loan, let us learn about it.
Home Equity Loan
It is a type of loan in which a person borrowing a certain amount uses the equity of her/his house as collateral. It falls in the category of secured loan. The amount of loan that can be raised depends on the present market value of your property. The property market value is decided by an appraiser/valuer who visits your house from the lending bank or other financial institutions.
How does it work?
In the case of a home equity loan, a borrower can withdraw the loan amount in a single lump sum that can be paid back in equal EMIs. It is like a second mortgage of your property. It becomes possible because of the increasing value of the property over time. The term to repay is generally 5 to 15 years. It can be used to fulfill any fund requirement.
Advantages of availing home equity loan
There are many advantages of availing a home equity loan.
Below are a few of them for your information:
- Flexibility: A home equity loan is an easy way to secure a higher amount of loan in short period. A borrower is free to choose the tenure.
- Hassle–free process: The steps involved to avail a home equity loan are simple and free from hassle.
- Lower EMIs: Choosing longer tenure for the availed home equity loan results in lower EMIs. This makes the repayment convenient for a borrower.
- Documentation: You don?t require producing more documents.With the help of the minimum documentation, an individual can apply a home equity loan online 24×7.
- Sanction & Disbursement: It involves speedy sanction and quick disbursement. The approval percentage is generally near 100%.
- Tenure: The tenure to repay the availed home equity loan is more in comparison to the other loans. It gives sufficient time to the individual availing loan to plan his/her investment to repay the loan with convenience.
- Rate of interest: The interest rate on home equity loan is low compared to the other types of loans. This helps to save your hard-earned money wasted in paying interest. It generally is allowed on fixed interest rate.
- Uses: The good thing about home equity loan is that it can be used for any purpose. A user can use it for personal or professional use depending on his/her purpose. There is no restriction as far as the usage is concerned.
- Tax: It is kept away from the tax and hence decreases your overall tax liability.
- Security to Lender: The home equity loan lender is secured. In the condition where the borrower is not in capacity to repay the availed home equity loan, the lender has the right to get the possession of the house. It can later be sold and the outstanding amount of Loan can be recovered.
Thus, the above benefits with a home equity loan make it one of the most preferred sources to raise fund for varied reasons. It can be availed from banks and housing finance companies on easy terms. Anyone who fulfills the eligibility criteria can apply home equity loan 24×7 online or alternatively he/she can visit a branch of the lender.