Home equity - may be the best way to establish a substantial credit line or loan. It is the value of the home excluding the mortgage debt and other encumbrances. So the longer the homeowner makes payments on the home, the more the home equity accumulates.

A home equity loan is a fixed amount payable over a period of years. A home equity line of credit is an amount that the consumer may borrow against by drawing cheques up to the amount of the approved credit line. This home equity line of credit may not have a definite pay off date. Home equity allows a consumer to make a substantial investment. However, depleting your home equity has its risks.

What to consider when shopping for a home equity loan:

• How much money is available to borrow on a home equity loan or credit line?

Depending on individual credit history, some lenders may allow the borrowing of up to 85% of the appraised value of a home. Know the interest rate and whether or not it is a fixed or variable rate. If it is a variable rate, know the index used and history of the index.

• What fees will be charged? Will there be interest charges too?

Insist on a list of all the fees and interest charges. Have a plan to repay the loan. Lenders may require payment only on the interest until the account closes or they may have a minimum monthly payment. Each individual should create a plan of how the loan is going to be paid off.

Consumers will be able to better determine if a home equity loan is right for their needs after reviewing these and other factors.

If you think an equity mortgage is the right move for you, please call us today for more details. We will be happy to help you.