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Home Equity Loans

A home owner loan or home equity loans allows you to unlock the value tied up in your property. This type of secured loan can be used for any purpose from a new car, or home improvements to a much-needed break away with the family. They are only available to anyone who owns their own home, either outright or under a mortgage.

This type of secured loan is a way of using some of the equity you have in your home for whatever purpose you need. It is the most common type of secured loan and often offers lower rates of interest than other loans

Secondly, you should find out if you actually qualify for an equity release scheme. Do you completely own your property? Is your mortgage fully repaid? If not, then you will not qualify for a home equity loan from certain lenders. Others will not make this stipulation, but it is worth finding out so you do not waste time filling out failed applications.

There are three types of home equity release.

Home income plans generate a monthly income, from a loan usually invested in an annuity, which pays your income but also the loan interest. To guarantee your income you should choose a fixed interest rate. Bear in mind that you lose the money paid into an annuity when you die unless you take capital protection, which can refund some of the annuity. Home income plans are generally restricted to the over 75s.

Loans or Mortgages use the equity of your home to allow you to borrow a percentage of its value. You agree an interest rate on the loan and repay that over a period, and the loan is repaid when you sell the property, or by your next of kin should you die. You can do what you want with the money. Sometimes, you may get a roll up loan, where you don't even have to repay the interest, which is instead added to the loan you owe. This can build up very quickly, so be careful with it.

Home reversion is different from the above two, as you actually have to sell your home to receive the lump sum or the income. You then live in the property for a nominal rent. These schemes are a last resort, as you won't receive market value for your home.

Please note these articles do not constitute regulated financial advice, which recommends a course of action based upon the specifics of your personal circumstances. These articles are intended to provide general personal financial information. We urge you to consult an Independent Financial Adviser (IFA) before making any important decisions about your finances.