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The 7 most important characteristics of home equity loans

Home equity loans are financing products that are far from consumer loans. By having a home as collateral to request them, their characteristics, purposes, or requirements are very different from personal loans offered by banks or credit institutions. If we are thinking about what they are, how they work, what they are for, or if we are interested in hiring one,  we will explain what its most important characteristics are.

What are home equity loans like?

Home equity loans, as their name suggests, use a home as a guarantee that we will be able to repay the borrowed money. Without a house that no longer has mortgage charges, we will not be able to request them. This guarantee will define the rest of the characteristics of this type of credit:

  1. Quantity. The maximum amount of these credits can be up to 300,000 euros, although the maximum will depend on the current value of the property that we put as collateral since they will allow us to obtain up to 35% of the value of the house today.
    • Example. If our house has a current value of 250,000 euros, we can get up to 87,500 euros maximum
  1. Deadline. By offering large amounts, their return times are usually similar to those of a  Phh mortgage, between 15 or 20 years maximum.
  2. Purpose. These types of credits are used for different purposes that, generally, we cannot obtain with consumer credit or with a mortgage. These are some of the purposes for which we would be interested in contracting this type of financing:
    • Reunite debts
    • Start a business
    • accept inheritance
  1. Cost: these loans have an average cost of between 11% and 16%, depending on the purpose.
  2. Application process. The application process not only includes an analysis of our profile, but also an appraisal of the home. In addition, having a home as collateral, the signature must always be done before a notary public.
  3. Requirements. As they have a home as collateral that guarantees the repayment of the loan, they will not ask for regular income (although it is advisable to have them) and it does not matter if we are in Financial Credit Institutions.
    • Some more lax requirements make them ideal to be able to obtain large amounts in difficult moments, but, yes, it is vital to make sure that we can return them without a problem.
  1. Shortcomings. This type of financing allows you to request a grace period for as long as up to five years.
  • Loans secured by a property Supre Grupo For any person with a home owned free of charges
  • Up to 40% of the value of the home (with a maximum of €300,000)
  • Term of up to 20 years to repay it
  • 2% TIN (3,90% TAE)  – 18% TIN (19,90% TAE)
  • Opening commission from 0.25%
  • Possibility of initial grace period of 5 years
  • Signature before a notary
  • response within 24 hours 

In addition to these characteristics, it is important to bear in mind that, in the event of non-payment, the mortgage guarantee will be executed. In other words, if we cannot afford to repay your installments, we run the risk of losing the home as collateral.

For this reason, it is important that, regardless of the purpose for which we use it, we are completely sure that we can deal with the repayment of the loan without problems.

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