No Equity Home Loan
A No Equity Home Loan is a kind of loan that enable you get equal or more than your property value. This loan is popular in U.K. & U.S. The main purpose of this loan is to improve the home such expansion, refurbishment, build a swimming pool, landscaping or gardening. Some peoples using the money from this loan for medical fees, consolidation debt and etc.
Sound like very good to taking this loan, in fact, there are many things you need to be consider before taking this loan.
1) Tax Implications - you may need to check with tax adviser, any loan greater than the property worth will not be tax deductible.
2) Private mortgage insurance (PMI) - almost all circumstances for this loan need PMI, and it will add more cost to the loan.
3) Higher interest rate - The interest rate will higher 2%-6% than ordinary home loans. It's not worth if the money from this loan is not used for emergencies.
4) Higher processing fees - lender charge for higher processing fees cause of they spend more times to scrutinizing your ability to pay, your business plan and the payment term.
5) Selling your home will be only gain 80% of the value - if you unable to pay for the loan & think that sold your home will settle all debt, it won't work. Because in such scenario, almost all homes sold are just worth 80%-100%. That mean you can't pay your lender in full, you will probable lose your home plus owe your lender big money.
Nevertheless, it is one of the way to get large sum of money to ease your emergency needs. Think and estimate thoroughly before meet with lender. If the loan use wisely, it could be a helping hand during your harsh time. Misuse of this loan could be a nightmare to borrower.
For more information about this loan, please check out
125 Home Loans instead of No Equity Home Loan
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