|
If you are looking at
credit card bills, college tuition fees, car payments, or existing loans
apart from your mortgage, and you could use some help with it all, you may
already own enough of your home to be able to raise a loan to pay off those
other debts, and do it in a way that saves you money on your loan
repayments.
When house prices rise
and over the same period you have been paying off part of your mortgage then
a gap will have opened up between what you could sell your house for right
now and how much you owe your lender. This gap is called the “equity” in
your property, and it is something you can use to raise another loan. These
days many lenders are prepared to advance you 100% of that equity amount.
Using home equity
finance to raise money is a serious step because the loan is a second
mortgage on your home, but it has two obvious and significant financial
advantages. The first is that mortgage loans are almost always cheaper than
other forms of borrowing, so by using mortgage finance to replace other
kinds of loans you can immediately cut your repayments and those savings
will continue over the years. The second advantage is that the interest on
your equity loan should be tax-deductible, so the real cost to you of your
borrowing is even less. Those two advantages combined can make a real
difference to your finances. |
