Home equity loans are financing products similar to personal loans, but that require putting a house that we own as collateral for the credit. In this way, it will be the home of which we are the owners that guarantees the payment of the credit and, in case of non-payment, this will be used to pay off the contracted debt.
Placing the home with a guarantee, although it is risky if we are not completely sure of being able to pay the monthly payments, allows us to use these credits for purposes that loans with personal guarantee do not allow.
Reunify debts, the best known purpose
If we have several credits that we are repaying at the same time and this supposes an imbalance for our economy, going to the refinancing to unify all the loans in one will allow us to pay only one installment and, if we decide to extend the term, that this monthly payment is less.
If the debts are small amounts or we have not defaulted, some entities may approve our request for a credit to reunify the debts. However, when the debts are of a considerable amount or we have defaulted on one of the monthly payments, practically the only alternative that we will be able to access will be the loans with a mortgage guarantee.
Help finance the acceptance of an inheritance
Accepting an inheritance requires certain costs that are not always easy to pay. According to different parameters, the cost of the Inheritance Tax can be several thousand dollars or even more than 100,000 dollars depending on the case and the Autonomous Community.
If going to a personal loan is not possible due to the large amount that the payment of the tax requires or because our profile is not suitable, mortgage loans will also allow us to put the inherited home as a guarantee to be able to meet the expenses involved acceptance of inheritance. Of course, if there is more than one heir, all homeowners must apply for financing.
The mortgage loan allows us to get up to 300,000 dollars from 15.71% APR, with a repayment period of up to 20 years, an initial partial grace period of up to 5 years and without the need to change banks. In addition, it also accepts people who appear in default files.
Obtain financing for a business project
If we want to obtain financing to undertake, there are many ways to obtain it. However, it happens that, if the project is completely new, many banks will deny us the request for financing.
Loans with a mortgage guarantee, in these cases, allow us to apply for them with the home we own and, in addition, they do not require having an income to be able to apply for them, which is why they are often a type of financing that is very suitable for this type of Projects. In addition, in many cases as in, they allow an initial grace period, which allows us to start paying later, when our company begins to give benefits.
As we see, depending on our situation, home equity loans may be a good financing alternative for us. Of course, it will be a good alternative as long as we are very clear that we will be able to face the return of the monthly fees.