Home Improvement VS Home Equity Loans
If you are looking to finance a home improvement by borrowing the money, you may say, "a loan, is a loan".
You would however be wrong in making that assumption.
There are different kinds of loans, and each has its own lending guidelines and may be tailored to a specific purpose.
Not to confuse someone, but a home improvement loan is to make improvements to a property, a home equity loan can be to make improvements to a property, or for other purposes.
Home equity loans are loans against the equity someone may have in their property; against the value of their property.
These loans are usually secured by the property, such as in a second mortgage.
Some banks offer a line-of-credit that is secured by the equity in a property. The homeowner may have £25,000 of equity in their property, and be approved for a £10,000 line-of-credit. Which means they can access part or all of this credit in order to do repairs, or for whatever reason they wish.
Reasons to consider a home equity loan:
- Interest rates may be lower.
- Longer term to repay the loan.
- May be easier to qualify.
Reasons to not consider a home equity loan:
- The loan is secured by the property, failure to make payments could affect the house.
- Terms can be long, like 10 years or longer. You may not want to be making payments that long.
- You may not have sufficient equity in the property to qualify for the loan.
Reasons to consider a home improvement loan:
- You can choose the terms that suit your borrowing needs.
- The loan is not secured by the property.
- No valuation of the property is required.
Reasons to not consider a home improvement loan:
- Interest rates may be higher.
- You may need a good credit score and good credit.
If you are in need of a home improvement loan, and do not have sufficient equity in the property, and may not be able to qualify for a personal loan through a bank, you may want to look into a Buddy Home Improvement Loan.
If you are in need of a home improvement loan, and do not have sufficient equity in the property, and may not be able to qualify for a personal loan through a bank, you may want to look into a Buddy Home Improvement Loan.
