Equity is the difference between what is owed on your home and the value of your home. By applying for a home equity loan you are applying for an advance on your existing home loan.
Home owners may take a loan any time they need money for any specific purpose. It is an easy way to access extra cash when you need it. Once this loan has been fully paid off there is no reason why you may not apply for another loan when you require cash again.
When you apply for a loan the bank or money lending agencies will check your credit record and you will have to prove that you earn enough in a month to sustain the monthly payments. As this loan is secured against your home the lenders know that they can not lose any money. For this reason they are always keen on lending money to home owners.
This loan is most often used for renovating the home. This is usually an expensive exercise and the loan comes in handy to pay for the repairs.
The loan can either be paid out in a lump sum of the bank will open a line of credit for you so that you can access the cash whenever you need it. This is the best way as you will be able to keep track of what is being spent on the project and none of it will be wasted.
Many borrowers use the proceeds of this loan to pay the tuition fees of their children who are starting college or university careers.