A housing loan or Home Equity Loan allows you to secure a loan up to 125 percent of your property value. If your home has a valuation of $100,000, then a housing loan offers you up to $125000. This type of loan is lucrative for a borrower who is looking for a high valued purchase. The more the valuation of your property the more is your eligibility to secure larger loan amount from a housing loan agency.
When going for a housing loan, do not forget to grab the best rates by comparing quotes from different lenders. If this is eating up your time and effort then try and secure at least four competitive lenders with attractive quotes that match your requirements.
Don't plan on moving. A housing loan suits you best if you are planning to stay at your present home for a long time. If you plan to relocate then it would require selling off this property and your loan being more than what your home is worth, it might be difficult to find a buyer who offers you price as high to pay off your mortgage.
Be in the good books of the credit bureaus. The higher the amount you ask for the higher is the risk for the lender. The housing loan agency will either offer you the loan an extremely high interest rate that will minimise his risks or offer you the loan at a considerably moderate rate but you need to have excellent credit scores in order to qualify for that.
Be prepared to pay for a high mortgage rate on your housing loan. It is most likely that with a large equity loan you have to pay higher interest rates unless you have a perfect credit score that gives you leverage to negotiate the interest rate with your housing loan agent. With a moderate credit performance plan out your budget to finance high monthly repayments on your housing loan.
Use this risky loan to minimise your risks. A housing loan gives you the opportunity of debt consolidation. By merging all your previous debts into one single monthly payment scheme you can mange your finances better. This opportunity reduces your tension of paying multiple debts with multiple lenders each with different pay due dates. You might also be able to reduce your credit card spending with a housing loan.
Most people make the mistake of making luxury purchases with the high loan amount. Since a housing loan is a risky proposition, if you use it as short-term debt to improve your long-term financial situation, it may be an intelligent move.
A debt solution to your problem is rightly supported by a consolidation effort from the amount of loan that you receive on mortgaging your your house. In doing this you will be back on the credit performance track again if you had been identified as a defaulter for missing out the due payment dates on your debts. A housing loan thus helps you to revive your financial position in the credit market by credit repair and debt consolidation opportunities.