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A fallacy doing rounds among borrowers is that their house is under risk of repossession if they take up a home equity loan. However, this is not completely true. The lender just has lien to your home, which can only be exercised if borrower is not able to repay loan. In meanwhile, customer can continue living in his home without any intrusion.
The lender can initiate proceedings for repossession of house only when customer has not paid installments on loan. Rarely would a person knowingly put his home in danger. The borrower, after studying all aspects of his financial condition, determines monthly repayments. But, rarely is planning foolproof. There are some situations that you might not have provided for; and this becomes your vulnerability. Because of difficulty in paying installments, customers fear repossession, which can become a reality very soon.
Avoiding loans against your home for every frivolous reason can be a way to stop this from becoming a reality. True, home equity loans are cheaper and easier to get. But think of after-effects of any such move. Your circumstances may change, making repayments difficult.
Numerous loans against ones home will only result in depletion of home equity. The savings in equity will work in same way as savings in money. Therefore, even if you do not have savings, you can always rely on your home to offer support. Complete exhaustion of equity will disqualify you from taking help of home equity.
So, before taking loan against your home next time, think twice. Think what your home means to you, and how you are going to do without it. This will ensure that decision regarding future of home is taken with added rationality.
Aditya has completed his masters in mass communications from Jamia University. If you need UK Personal secured and unsecured loans visit http://www.ukfinanceworld.co.uk