Home Equity Loan Waterloo
A home equity loan in Waterloo (HEL) and a home equity line of credit (HELOC) allow you to borrow money against your home as collateral. These loans can be taken out to meet expenses, such as home repairs and renovations, financing a new property, funding your child’s college education, or paying off unsecured debt. It is a good idea to understand how these two loans work if you are looking to use the equity in your home. Whether you go for a HELOC or home equity loan from Access Mortgage, you should know the basics and the advantages and disadvantages of these loans. Read on for more information.
How do they work?
Both HEL and HELOC are secured loans where you pledge your property to the bank or lender. In case you fail to repay the loan, the bank/lender can lay claim on your property. In a HEL, banks offer a large amount of money (close to 80% of the value of your property) in one shot as they are secured loans. A home equity loan is typically offered at a low rate of interest, making it reasonably affordable. On the other hand, a home equity line of credit is a revolving credit line secured against your home as collateral. A maximum amount, based on your home’s built-up equity, is made available by the lender. You can draw from this credit line whenever you need cash.
Advantages and Disadvantages
One advantage of these loans is the large amount of cash made available to you for important expenses. They allow you to convert the built-up equity in your home into liquid assets. A home equity loan that offers you a lump sum amount is the ideal choice if you want to make a big purchase. A home equity line of credit is best suited when your expenses are scattered, such as your child’s wedding, for the payment of tuition fee for your kid’s education or to cover your medical bills from time to time. The rates of interest on these two loans are relatively smaller as both the home equity line of credit and the home equity loan are secured against the borrower’s property, reducing the lender’s risk. The major disadvantage of these loans is that the borrowers are at a higher risk as they may lose their home or property in case of default or foreclosure of the loan. So make sure you assess your financial needs carefully before opting for a home equity loan or a home equity line of credit.
For more information about a home equity loan in Waterloo from Access Mortgage, please feel free to continue browsing through our website. Click here to find our contact information and to fill out our contact form.