Have you heard about home equity loans, but aren't sure if they're right for you? There are certain times when a home equity loan could be ideal just as there are times when more traditional mortgages might be more suitable.
Why Do I Need a Home Equity Loan?
Most people's biggest asset is the family home. As the years pass, your mortgage is paid off and the value of your home has increased to several times what you originally paid for it. This increased value, minus your loan balance, is called your home equity.
Banks are able to lend you money using your home equity as collateral, or security, for the loan so that you can access that value to do other things. You might decide to renovate your home, add on a new room or a new kitchen. Some people use this value in their homes to fund wealth building ventures. You could use your home equity to purchase an investment property or to invest in the share market.
The idea behind a home equity loan is that you are able to redraw your own money out of your equity to use however you choose.
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