Home equity loans
Control when you draw funds and how much, with a flexible line of credit.
Home Equity Loans
A home equity loan will allow you to access the equity in your home and use it to invest in another property, fund renovations, or for any worthwhile purpose. Home equity loans have been popular in past years because of their flexibility. You can actually use as little or as much of the loan whenever you need it.
However, some lenders are now cautious when approving home equity loans because there some borrowers in the past have not used their equity responsibly or revealed the true purpose to the lender. Most banks have a “cash out policy” that limits the amount of money they will release to the borrower.
Several popular ways people use home equity loans:
- Buy a property
- Invest in a business
- Invest in stock market
- Consolidating your debts
- Buy a new vehicle
- Renovate your home
- Additional fund for holiday
- When you’re having a baby and on maternity leave
Some lenders may require you to prove the purpose of your loan. Though requiring proof is largely dependent on the amount you need and where you will use it, you might want to get documentation ready if the lender asks you to provide evidence.
For example, if you are buying shares and investing on the stock market, the lender may ask for an accountant’s letter or investment strategy from your financial planner. If you are buying a property, the lender may require a letter from your conveyancer. On the other hand, if you are borrowing for renovations, the lender may ask for quotation from your contractors or a copy of building contract.
If you wish to talk to a 3Carrots mortgage broker to know more about home equity loans, please call 0434 390 688 or email doug@3carrots.com.au.