Forex-Zone

Home Equity Line of Credit

Get cash using the value in your home

Home equity release is a way to access cash using the value which is 'tied up' in your house. It's a line of credit that is available to homeowners over a certain age who have paid of some or all of their mortgage and want to continue living in their own home.

It is a complicated area of finance and before you enter into any agreement, carry out thorough research on the lender you are considering dealing with and also research the different types of loan available as well as ensuring you're being offered a reasonable interest rate.

Who is eligible?

* People over a certain age (usually from 50 years)
* Homeowners

How does it work?

Broadly speaking, there are two types of home equity loan; a home reversion plan and a lifetime mortgage. Within these loan types there are many variations and Interest rates. Repayment terms and other conditions will vary between different lenders. Here is a brief overview of how these schemes work:

Lifetime mortgage:

* Continue to live in your home
* Receive a cash lump sum, regular income or both
* Make monthly interest payments on the loan
* Repay a pre-agreed amount when your house is sold

Home reversion plan:

* Continue to live in your own home
* Sell all or part of your home
* Receive a cash lump sum
* Pay little or no rent while you continue to live in your home
* Your loan is paid off when your house is eventually sold

Should you take out a home equity loan?

Like any financial product, that decision depends on your individual circumstances and requirements. A home equity release scheme is a serious financial undertaking and it is absolutely vital that you thoroughly research all your options for raising funds before you commit to this type of financial arrangement:

* Can you sell your current home and downsize?
* Are there any other assets you can sell?

Always seek independent financial advice

Learn about the different types of home equity loan (we have covered only the basics here) and thoroughly research any lender you are considering doing business with. Don't rush into any agreement, it's important to be armed with all the information you need to make an informed decision and get the best deal available.