Resources
Work At Home Mom, Dream or Reality?
By Ove Nordkvist
Today it's a very popular option to become a work at home mom. And there are many advantages, compared to a regular job. If you do get things done by your own, that is, you don't need a boss to point Read more...
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Resources
A Simple 5 Step System For Starting A Home Base Business... The Right Way
By Cory Threlfall
Home Base Business and the dream of working from your own home, by your own terms and hours is a dream shared by many, but the unfortunate thing that happens, is they 'Fail' because they started it Read more...
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Resources
Really, Work at Home?
By Rolf Rasmusson
Work at HomeWhy would anyone really want to work at home? I sure wouldn't unless the plan only called for a short while. If you have a real job and you do it at home the Read more...
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Securing A Home Equity Loan
By Peter Kenny
If you own a home, then one way to free up extra money to consolidate debt or to make improvements is to take out a equity loan. A equity loan is money that you borrow against the money you have paid towards your property. The amount you can borrow depends on the level of equity that you have, which is determined by your property value minus the amount you have outstanding on your mortgage. The equity is used as collateral to obtain a loan, which is basically a second mortgage. Rates on these types of loans are slightly higher than normal mortgages, but still low compared to other types of loans.
Why a equity loan?
A equity loan has a number of advantages. Firstly, it can be used to get credit even if your credit rating is poor, because you are putting up collateral. Also, there are significant tax savings over normal loans as the interest paid on a equity loan is tax-deductible. Also, you can borrow a lot more money than you usually can through an unsecured loan. You could use your equity loan to consolidate your high interest debts, to make improvements or buy other costly items. However, before you get a equity loan you should look at the possible dangers involved, as some lenders can cost you a lot of money by not giving you all the facts. Here are some of the dangers of equity loans:
Equity stripping
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One problem that can occur with equity loans is equity stripping. If you get a loan knowing that you cannot make the monthly repayments, a lender might give you the loan anyway. The lender is not concerned if you make the payments or not, as they can simply take away the equity in your home. To avoid this, be honest with yourself and only take out a loan that you know you can afford, even if you get offered more.
Balloon payments
If you are struggling with your current payments, then a lender might offer a equity loan at a much lower price than you are paying right now. This may seem attractive, but it usually involves a hidden ‘balloon’ payment at the end. Your payments are lower because you are only paying the interest back, but at the end of the loan term you need to pay the amount in full. This is likely to leave you in financial trouble and you may lose your home. To avoid this, make sure that you can easily afford your monthly payments, and if you do have to refinance make sure you can afford the final payment.
Credit insurance
One of the most costly aspects of a equity loan is credit insurance. You have agreed to a loan that is within your budget, but the lender then adds on extra features that you do not need, such as credit insurance. These items can significantly increase the amount you pay back, and often cover you for a minimal amount of situations. Before you sign anything, check that the terms are for the loan payments only, and not for extra insurance. If you do want insurance, you can usually find it cheaper elsewhere.
If you decide to get a equity loan to consolidate your debts or free up some money, remember to look around for the best deals and to avoid signing anything that will cost you more money than you can afford.
For additional articles and an extensive resource for everything about credit cards and finance, please visit us at Compare Credit Cards and Mortgages UK
Visit www.creditcards-gb.co.uk
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