Home equity loans are also known as equity release schemes. Home equity loans are aimed mainly at those homeowners that have paid their mortgages off. They can receive a cash lump sum or some income by unlocking that capital.

People take out a home equity loan for a variety of reasons. Some people do it in order to finance home improvements, buy a new car, consolidate their debts or go on holiday. Others may want to receive a regular income source so that they can pay for residential care, or just cost of care.

Home equity loans have fixed rates with longer terms, over a fixed period of time. Home equity loans can be ideal for longer-term financial goals because you receive amount of money you borrow in one lump sum. A home equity line of credit is similar to a credit card, where you may regularly use it up to your credit limit.

One of premium features of a home equity line of credit is that interest rate is typically lower than that of a credit card.

A Home Equity Loan will usually mean that you get better interest rates, but you should always remember that your house is at risk if you fail to repay Home Equity Loan.