How to get an Equity LoanWhere can I get an equity loan?
Own home loans and credit facilities
As a rule, a home equity loan offers a one-off loan disbursement to the borrowers. Usually there is a firm period of notice for payments (e.g. five to ten years) and a firm monetary amount in dollars. If the loan is repaid, the borrowers can request another home equity loan (and again pays the setup fees).
A pensioner, for example, can receive a home equity loan of $20,000. Assuming a repayment period of seven years and an interest of 8 per cent per annum, the total amount of money to be paid per month would be approximately 312 US dollars. Home-equity lines of credit offer a pensioner a certain amount of money that can be lent at one go or over a period of times as needed.
As soon as the pensioner lends against the line of credit, payment begins at an interest fixed by the loan documentation. Let's say, for example, that a pensioner is eligible for a $15,000 line of credit. Mm. In the first few months, the pensioner draws $5,000. Payment starts on the basis of the $5,000 drawing.
Couple month later, the pensioner pulled another $3,000. Disbursements would then be made on the basis of approximately $8,000 of the loan. Sometime in the near term, the pensioner could lend the rest of the line. Or if the pensioner finally repay the $8,000 loan, he or she would have up to $15,000 available to lend again if necessary.
A number of home equity loan products have the characteristics of a home equity loan and a home equity line of credit. Home equity loan products offer a combination of the two. Borrowers may use part of the line of credit but then block that amount to be treated as home ownership for a specified amount of the term.
Remaining part of the line of credit continues to be available for taking out credits on a rolling loan base. In comparison to a reverse mortgages, a home equity loan/credit line is a more cost-effective option in relation to the upfront cost (points, transaction charges, etc.). Conversely, creditors will grant these credits on the base of your earnings and creditworthiness.
Eligibility for a home loan can be difficult if you live on a steady salary. Credit lines are also likely to be lower than they would be with a reversed mortgag.