Home Equity Loans
Free up the money in your house: it could be more than you think
Home equity loans sound complicated but they're based on a simple idea: there's a difference between the value of your house and the outstanding amount of your mortgage. That difference is called equity, and home equity loans enable you to borrow an amount based on that figure.
Home equity loans aren't as complicated as you might think. If you've had a mortgage for a while, there's a good chance that there's a big difference between the value of your home and the amount of money you still owe in mortgage payments, and that difference is known as equity. So for example if your house is worth £100,000 and you've still got £50,000 outstanding on your mortgage, the equity in your home is £50,000.
Home equity loans are often targeted at older consumers, with companies such as Northern Rock and Scottish Widows offering such loans to the over-60s. These schemes don't always involve repayments; instead, the bank gets its money back by selling your house when you leave it (either by moving elsewhere, going into long term care or because of death). The idea is that home equity loans can help pensioners who have expensive houses but limited incomes by freeing up the value of their property without forcing them to sell their house.
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