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Many people have heard about an equity loan called a Home Equity Line of Credit but are not really clear about what they are. They are a very common and popular type of loan than allows homeowners to draw on the growth in their homes and are usually referred to as a HELOC. A HELOC can give people the flexibility and convenience that is similar to a credit card account, but with much lower interest rates.

While a HELOC can be considered a type of home equity loan, it does have some unique features that make it a bit different. They also have some specific benefits that often make it the most attractive form of financing for people who have some growth in their homes.

Home equity is the value of the "unencumbered" portion of a homeowner's property. In simple terms, it is the difference between the fair market value of your home and the balance of any mortgages that have been taken out against the home. If you have a home with a fair market value of $220,000 and the balance of all your mortgage loans is $120,000 in total, then you have a home equity value of $100,000 that you can borrow against to take out a borrowing off your house. Continue reading →

Mortgage, second mortgage and equity release schemes are all used as synonym for home equity loans and are basically the loans availed against your home. In home equity loans, you are borrowing an amount from a lender based on the worth of your property.

What are the difference between Mortgage loans and Second Mortgage loans?

If you own your home fully, the equity loan being availed on it is termed as mortgage loans. If your property is partly owned by you but has equity, then you can avail second mortgage loans. If you have already availed a mortgage loans and not fully paid off, you can avail second mortgage if the home has equity. Continue reading →