Help to remove your debt by releasing equity from your house

by Mark Longman

Owning your own property is a superb thing even though it can be a large expense. There are a number of benefits to owning your own house and financing it. You may be surprised at what you can do with a home that you are paying a mortgage on. The biggest thing that a home can bring to you is equity. Equity is the difference between the current market value of the home you own and the amount left on your mortgage. If the real estate market values your home at more than what you currently have as a balance on your mortgage then you have equity in your home.

There are a number of benefits to equity the biggest is that it is something that you can borrow against. This can be of great help especially in dead reduction and consolidation. In fact, it is pretty much the biggest benefits. If there is equity in your home, you have the option to release that equity in the form of a home equity loan. This can be taken out in one of two ways. The first way is to use it as a line of credit.

The line of credit option that can be used for releasing the equity of a home in small amounts is great for when you have only a small amount of debt to consolidate or are doing a smaller sized remodel project for example. This allows you to withdraw money and then pay it back and borrow against it repeatedly. This however, is not for larger debt consolidations

If you need to remove, a large amount of debt then considers doing something on a larger scale to reduce the equity in your home. This equity release would be a full release in other words you would take out the home equity loan not as a line of credit but in a single lump sum. This is great for individuals who have a large number of debts, large debts or a number of debts that have high interest rates attached to them.

It does mean that an additional amount is added to the mortgage of the home. However, it is most often the case that this amount is significantly less than the amounts that were in total previously being paid. It is best to release the equity in your home only if you have high interest debt, or large bills that need to be consolidated in order to prevent things such as bankruptcy or heavy damage to your credit. While there are a number of benefits, there are also some downsides to releasing the equity in your home. As a result, it is best to do it only if there are no other options available to you.

Remember if you only have a small amount of debt or have a small project that you are in need of money for consider taking out a line of credit type loan rather than a lump sum. Knowing your options is half the battle to getting out of debt.

About the Author: