Is it wise to take out a home equity loan when I need immediate cash?

Do you need immediate cash with which you want to renovate your home? If answered yes, you must be looking for a loan that can help you get instant access to cash. Other than personal unsecured loans, you can also get a home equity loan by tapping the equity in your home. You must be thinking how that is possible. Well, if you had taken out a home loan of a certain amount, it is most likely that you've been repaying the loan amount in monthly installments. The amount of money that you've already repaid is known as the home equity that you've accumulated and you can take a loan out of this amount after considering the home equity loan rates. What are the advantages of taking out such a loan? Read on to know about them.



1. Low interest rates: The interest rates on the home equity loan will be much lower than that of the unsecured loans as your home will be used as collateral. Since there is less risk for the lender, he will charge low rates on the loan and thus you can make repayments on this loan in small and affordable monthly payments.


2. Longer repayment term: The repayment term of the home equity loan will be much longer than the unsecured loans as the amount that you take out is usually huge. Since the repayment term is longer, you can repay the loan in small and affordable monthly payments.


3. Tax benefits: The interest rate that you pay on the home equity loans will be tax-deductible and you can thereby save a lump sum amount of money every month. This debt is known as good debt and hence you may qualify for such money-saving tax benefits.


4. Proceeds can be used for any purpose: The proceeds of the home equity loan can be used for any purpose like home improvement, debt consolidation and also paying your son's college fees. Just make sure that you combine your unsecured debts only after considering your repayment ability.

When you take out a home equity loan, you have to stay sure about the home equity loan rates so that the lender charges you with the actual rate that is prevalent in the market. Manage your personal finances and make timely repayments on the loan to save your house from a foreclosure.