A home equity loan enables you to borrow against the money you have already paid into your house. Equity credit rates are usually significantly lower because they are secured by a 'bricks and mortar' asset (your house). Because of this, interest is more competitively priced than for other types of credit, for example credit cards. Also in some cases the interest can also be claimed as a tax deduction.
This type of borrowing can be in the form of a line of credit (where you draw money as needed) or fixed where you receive an agreed amount as a lump sum. The market for this type of credit is very competitive and you can get significant savings on rates by shopping around.
Lenders offer a variety of loan options and it's important that you compare them in order to find the best deal. You can do this through lender's websites the internet by completing an online form in which you specify your house's value, your mortgage balance and any other outstanding liens. Lenders will show you amount that you can borrow based on these calculations and the interest rate that they charge.
For example, with a line of credit, you only pay the interest on money that you draw while the fixed credit option provides the advantage of receiving a lump sum with fixed payments over the life of the credit term. These types of loans are great for debt consolidation, unexpected expenses, home renovations or for vehicle purchases.
Home equity loan rates are typically much lower than for other types of credit and repayments can be budgeted into your existing mortgage payments. They offer a way of accessing the money you have invested in your house and, by doing a thorough comparison of lenders, finding an attractive rate of interest.