How Do You Release Equity in a House that the Mortgage Has Been Paid Off?

How Do You Release Equity in a House that the Mortgage Has Been Paid Off?

You can either remortgage your home or take out a home equity loan.

Both solutions involve loans that are secured on your property. A remortgage may offer a slightly lower interest rate than a home equity loan although there may be additional costs involved (such as valuation or legal fees) and it may be tough to get a remortgage if you’re self-employed or you have experienced credit problems in the past.

A home equity loan is therefore a low-cost and flexible alternative to a remortgage. You can typically borrow up to 80-90 per cent of the value of your home depending on the amount you need to borrow, your income and your credit history. The lender will take a legal ‘charge’ over your home as security for the loan.

You can use a home equity loan for almost any purpose. Perhaps you want to undertake improvement work to your home such as a loft conversion, extension or a new kitchen or bathroom? Or, maybe you have a number of high-interest debts such as loans or credit cards that you want to consolidate. A home equity loan can help with these and lots of other borrowing requirements.

As the lender has your property as collateral for the secured loan you will often find that home equity loans charge lower interest rates than other types of borrowing such as overdrafts or credit cards. Bear in mind, however, that if you fail to keep up your repayments on a home equity loan then you could lose your home.

You can typically spread your home equity loan repayments over a period of up to 25 years and you can generally pay back the loan early should you want to.

Applying for a home equity loan is simple and you can often complete your application form online. You may have to provide some documents to your lender to confirm your income, although these will not always be required. This makes home equity loans the perfect solution if you’re self-employed.

Once your homeowner loan has been agreed upon, the cash will generally be in your bank account within 3-4 weeks.

To access the money tied in your home equity and get a great loan rate, book an appointment with the Mortgage Genie.

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