Do you urgently need money? No problem, you can apply for a consumer loan at any bank. All you have to do is bring your pay slip to prove your ability to pay.
But you should not assume that you can borrow any amount of money. The size of your loan is based primarily on your income. What should you do if you urgently require a large sum of money? Home equity loans can be the solution.
What are the advantages of a home equity loan?
1. A big limit
The maximum amount that you can borrow from the bank in this case depends not so much on the borrower’s income but on the value of the property. If your loan is much less than the market value of the property, you may not even have to provide proof of income.
However, the size of the loan may still be affected by the date of construction of the building, its condition, and the area of the city where the property is located.
2. Lower interest rate
If you have security, your interest rate on a loan is noticeably lower than on a consumer loan. This allows you to save a lot of money in overpayments when you repay your debt.
3. Longer loan term
Consumer loans are usually offered for a maximum of 5 years. For secured real estate options you can find offers for up to 20 years. If you choose a longer term, you will pay less in monthly installments. That way you don’t strain your family budget too much and you can even pay off your loan prematurely, thus saving on interest.
4. Uncomplicated proceeding
You may think that setting up a mortgage can be very time-consuming. This is a common reason why this type of loan is not very popular with the public. However, this is not the case. The registration procedure is well worked out, so it only takes a few days to prepare all the documents.
5. Property parameters
Not only a flat can be considered as collateral, although banks are more willing to consider this option. Also of interest are rooms in dormitories, apartments, commercial premises, non-residential premises located on the ground and basement floors, country houses and country houses.