What is a Home Equity Loan?
Home equity loans allow homeowners to borrow against the equity in their homes. The rates are typically lower than any other type of loan.
With Home Equity Loans, you are generally getting a lump sum at a fixed rate agreed upon prior to the start of the loan. With the Home Equity Line of Credit (HELOC), you are normally getting a variable rate where the rate is calculated at the prevailing rate when you draw on the line of credit. Therefore you should carefully consider which financing option is the better one for you.
When should you get a Home Equity Loan?
Debt Consolidation
Suppose you have a high interest credit card debt. You can use the relatively lower interest rate Home Equity Loan to pay off that debt and enjoy the difference in interest rate between the two. This holds true for other debts like college loans or car loans.
Renovation
Since home equity loans are based on the equity of the home, some owners choose to utilize home equity loans to pay for renovation costs. This is in hopes of increasing the valuation of the home, resulting in a net gain in total capital for the owner.
Unexpected expenses
Sometimes life throws us a curveball. Unexpected expenses like an emergency hospital bill can severely impact our quality of life in the short term. Using a home equity loan to tide us through this period may be a good option if the finances are healthy in the long run.
How do you get a Home Equity Loan
In order to get a Home Equity Loan, you need to be prepared to prove the ownership and valuation of your home. Thankfully, Oxprop offers a simple and hassle free way to apply for your Home Equity Loan here.
What do you need to get a home equity loan?
To prepare for the application, ensure you have the following documents so that the process will be smooth sailing:
- CPF or Bank Statement proving your income
- NRIC / Passport
- Property Deed
- ACRA filings of your company
