What is an Equity Loan?
An equity loan is otherwise known as an equity release scheme. An equity loan is a loan that allows you to release some or all of the money locked up in your property. Equity loans are mainly aimed at home owners who have paid off their mortgage.
With an equity loan you can receive a cash lump sum or a regular income from the finance raised by unlocking the capital in your property.
Why Choose an Equity Loan?
Equity loans can be a useful way of releasing the finance you have tied up in your property. With an equity loan you can finance education, make home improvements or extensions, buy a new car, go on holiday or finance a wedding.
You may also want to choose to take out an equity loan to receive a regular income source to pay for care and residential care.
Equity Loans
There are three different types of equity loan that you can take out:
Personal Loans or Mortgages
Personal loans or mortgages use the equity of your property to allow you to borrow a percentage of its value, most loan lenders offer equity personal loans up to 125% of your property's value. The interest rate and loan repayment period is based on your financial circumstances and individual preferences. If you haven't repaid the equity loan by the time you sell your property, the money raised will be used to pay it off. This type of equity loan is for any purpose, including buying a property.
Home Income
Home income equity loans allow you to receive a regular monthly income from a loan, usually invested in annuity. The annuity will generate your income and the loan interest. Home income equity loans are usually limited to people over 75 years old.
Home Reversion
Home reversion is where you actually sell your property to receive the loan finance. You then live in your property and pay a nominal rent. It is important to remember than a home reversion equity loan is a last resort for cash.
Equity Loan Application
To be accepted for an equity loan you need to be a UK home owner and to have paid off your mortgage in full.
You can apply for an equity loan online. It is important to compare at least three different equity loans before you choose which one you will apply for.
Compare equity loans
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