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The basics of Home Equity Loans
By gnass | August 13, 2008
Applying Home equity loan for a property owner is no big deal these days due to its easy availability but he should think twice before taking such a decision. Unless one is 100% confident about paying back the loan, it is risky to avail equity loan because in case of a default, the lender reserves the right to sell the property, taken as a collateral security, to recover the loan amount. There are two types of equity loan modules: in the first module the rate of interest is fixed and the repayment period may vary from 5-35 years depending on financial criteria.
In module 2 (HELOC), the borrower keeps the property as a collateral security but takes the loan amount from the bank on an as and when required basis. This module of loan is more like an overdraft account or like a credit card. The rate of interest is also lower here than home equity module.
Topics: finance |