line of equity

Property financing has become quite versatile now, and it plays more than one role. You can use it not only to buy your home but also to pay off other debts or a significant expense. The home equity line of credit allows you to borrow money based on your home equity.

Below are the points that drive attention to some crucial aspects of the home equity line of credit. Gather a better understanding of how this product works.

How Do Home Equity loans work?

You can borrow up to 80% to 85% of your home value, but the amount you owe is deducted from that value. You have a specific duration of the draw period, for instance, 5 years or 10 years. You can withdraw the money up to the maximum limit of this duration. The amount you borrow should not be more than the value of your home.

Reasons to prefer home equity line of credit

In other words, you can also say that there are many benefits of a home equity line of credit, which are even known as home equity loans.

  • The interest rates are always low as compared to personal loans, credit card, overdrafts etc. because the home works as the security for the lender.
  • Home equity line of credit supports your debt consolidation plans. It makes debt management easy because you get funds at a lower rate to pay off the other high-interest debts.
  • You can borrow a more substantial amount and can fulfil more significant needs of funds which is impossible if you borrow through short-term loans.
  • Home equity line of credit is easy to obtain than a remortgage or a credit card or any other loan. This is because if you have a poor credit score or you are self-employed, it is not easy to qualify. The lenders and finance companies have stringent rules on remortgage and loans etc.

Every borrower has a different experience, and that decides the number of benefits he can count while using the home equity loans.

Basic Features of Home Equity Loans

Before you make any choice, it is better to know about its essential features. The decision becomes easy when the concepts are clear.

It is a secured product with lower rates
It can be used for any purpose
The repayments can be spread to a longer-term
The repayment schedules are flexible and customised
No additional collateral required home is the underlying security

Every feature says only one and that is the product is borrower-friendly. One can easily rely on it to get back the lost balance of financial life.

How To Qualify?

Don’t worry, the qualifying conditions are not complicated, and they are easy to fulfil –

  • Your payment history with the lender should be good. The lender is always ready to cooperate you if you are paying instalment on time.
  • The current repaying capacity should be satisfactory, which includes consideration to debt-to-income ratio.
  • The bad credit score is acceptable, but different lenders have different limits. Some may accept you even on a score of 561 while some may ask you to bring it at least 630 or something like that.


Home equity loans are quite popular in the finance industry of the UK as they act as the saviours of financial life. The flexibility in repayment, ease in interest rates, capacity to provide a significant amount make these loans favourite to many. But one thing is essential that the borrower should take due benefit if these lucrative features. Take out funds for an actual reason and not for just a desire or to buy an unnecessary luxury thing.