“What are Home equity loans? Are they different from home loans?” I had always had this question in my mind when I glanced through the loan advertisements on the papers. I thought that it was the word equity that mattered but later as I started to delve into the facts I came to understand the actual difference.
Homeequity loans are different from home loan, because home loans are borrowed to buy or build a house but home equity loans are borrowed by using the house one owns. A person can mortgage his existing property to the bank and take a loan for some other purpose. The loan offers its borrowers the facility to use either their residential or non residential properties for approval. The home equity loans can be used for the purpose of education, hospital expenses, wedding and so on.
The amount of loan offered depends on the current market value of the property. Usually banks in our country offer around 60-65% of the actual value of the property as loan. The value of the loan for commercial and residential properties ranges from 10-15 lakhs. The interest rates and the repayment duration depend on the policies of the lender.