Home Equity
Home equity according to Wikipedia “is the value of a
homeowner’s unencumbered interest in their property”. It basically means the
difference between the market value and the money you owe to your lender. For
example you owe $250,000 to your lender and the market value of the property is
$550,000; then you have $300,000 worth of equity.
The equity of a property increases, as you repay your loan off.
The equity from your property can be used as an investment
like to renovating the property or invest in other properties, invest in shares
or managed funds or even refinance your mortgage. Equity gives you something
called line of credit or LOC, which is to a certain amount. You can take this
credit in different stages or as a whole to invest in anything of your choice.
The main benefit your of your equity, is that it gives money
to work on different small projects like renovations or even buy property, all
this depends on each individuals situation, your mortgage, your property value
etc.
You can get a home equity loan by pledging you home to your
lender. The amount again is determined on your situation. There are two types of
Home equity home loans, closed end home equity home loan and open end home
equity loan.