A Home Equity Loan allows homeowners to borrow against the equity they have built up in their property. These loans are typically offered as a lump sum with fixed interest rates and predictable monthly payments, making them ideal for large expenses like renovations, debt consolidation, or major purchases.
Because the loan is secured by your home, interest rates are usually lower than personal loans or credit cards. Home Equity Loans may also be tax-deductible, depending on how the funds are used. Homeowners should consult a tax advisor for details.
Unlike refinancing your mortgage, a Home Equity Loan does not replace your existing loan—it provides additional financing while keeping your current mortgage intact.
A Home Equity Loan lets you borrow a lump sum of money secured by the equity in your home. Equity is the difference between your home’s market value and what you owe on your mortgage. This type of loan usually comes with fixed interest rates and repayment terms ranging from 5 to 30 years.
To qualify for a Home Equity Loan, lenders generally require:
Every lender has slightly different requirements, so it’s important to shop around and compare offers.
Common uses for Home Equity Loans include:
It’s generally not recommended to use a Home Equity Loan for discretionary spending, since your home is the collateral.
You can apply for a Home Equity Loan with most banks, credit unions, or mortgage lenders. You’ll typically need:
It is possible to take out multiple Home Equity Loans, but most lenders limit the total borrowing amount based on your available equity and ability to repay. In many cases, homeowners may choose a Home Equity Line of Credit (HELOC) as an alternative for ongoing access to funds.