Many people feel that leveraging the equity in their home is the last resort, however, that is definitely not the case. Your home is your strongest collateral and this can be used to your advantage.
Many lenders see borrowing against your home as a low risk, meaning you'll likely get lower interest rates and lower payments.
When used proactively, a home equity loan can improve your finances and your life in numerous ways.
Start a business
Using funds from your home equity loan to start a business is a great way to increase your financial freedom. Business loans can be extremely difficult to procure and often come with high-interest rates and payments. Using home equity funds could be just the boost you need to get your business up and running successfully.
Renovating your home
Renovating your home is an investment, not an expense! If you have some work to do around the home, this is a great way to get the funds and increase its value at the same time. A home equity loan is especially great when you are renovating to add a rental suite that will bring in extra money as this suite will cover the cost of the loan payment and likely a few extra dollars in your pocket too.
Purchasing an investment property
A traditional mortgage to purchase an investment property can be tricky to obtain as banks often require you to bring in enough non-rental income to make your monthly payments. This is in addition to your current and primary home. If you're looking to buy a secondary home for investment purposes, you may want to look at your primary home first to see if you can use this as equity, it will likely be a lot easier and less expensive.
A good education is one of the most valuable things a person can have, it can also be one of the most expensive. Rather than taking out a student loan or bank loan to fund your education with high-interest rates and extremely strict payment schedules, your home equity may provide a more flexible, affordable option.
Consolidate your debt
Having debt spread across several credit cards, lenders, lines of credit, etc. each with a different interest rate and payment schedule, can become extremely expensive and daunting to keep track of. Pay off those debts once and for all and leave yourself with one simple monthly payment at a low-interest rate.
Whether you're looking to have fewer payments at lower interest rates or you're wanting to springboard your new business, a home equity loan could be a great option for you.