An Overview of Home Equity Loan Features
In today’s market, there are a wide variety of flexible mortgage products which you can choose from, each with their own particular features.
You might be comparing a standard variable rate loan to a home equity loan, noticing that the standard variable mortgage has a slightly lower interest rate, and thinking therefore that the latter might be the more attractive option for you.
Whilst this may be the case as it is initially cheaper, the trade-off is that the standard variable rate loan is less flexible.
For instance, if you obtain a standard variable mortgage, but plan to possibly move house in coming years and purchase a home elsewhere, you would have to apply for a new mortgage again on the new property when you move, and you will therefore re-incur application and financing costs, as well as mortgage stamp duty all over again.
Most home equity loans, however, are portable. They allow you to simply switch the security that your financier holds for that mortgage from your previous home to your new home.
It’s also quite easy with a Home Equity Loan to switch from principal and interest, to interest only repayments. This may come in handy if you find yourself out of work for a spell, or you experience some other form of unexpected financial difficulty.
