What you need to know about home equity loans

Banks offer a large number of options when requesting a loan and one of them is what is known as a mortgage guarantee loan, which can be very useful on certain occasions.

It is not the credit that we should consider as a first option, since there are others that are much more attractive, but when we cannot access the rest due to various circumstances, it will allow us to have large amounts of money.

When we ask for a loan from a bank, they usually ask us for a guarantee as insurance for the entity. Thus, in loans with a mortgage guarantee, the collateral will be our home, which must be paid in full or at least 80%. It must be clarified that this credit has nothing to do with a mortgage, since it is a loan in which we use our properties (the house) as collateral in case we do not return the money.

Putting a house as collateral for a loan is not the best, so we must leave this possibility if we do not have access to financing and we really need it. These are cases in which we must face large debts, start a business, etc.

Thus, to request this money, the bank will not ask us for a payroll or savings and it will not even matter if we are included in one of those lists of defaulters such as ASNEF or RAI.

Another difference that we are going to find is the amount that we can request, which is quite high.

This is impossible with other financial instruments, such as the famous quick loans. It is possible that they will grant us one, but the amounts are usually low and they also have to be returned immediately.

Loans with a mortgage guarantee give us very high amounts, which we can repay in many years, almost in the same way in which we pay the mortgage.

Of course, these credits have their drawbacks, so they should always be left as the last option.

While we are paying it we can live in our house, but if we stop paying the installments they will seize it. Before signing it, it is a good idea to make sure how many installments we can pay without the bank taking legal action.

Nor should we forget about interests. Large amounts of money to pay in long terms mean very high interest. Thus, in the end we are going to return much more money than they lent us.

To these interests we must add commissions and management expenses, which will depend on the amount they lend us.

Finally, this is not a way to obtain financing in 24 hours, as happens with quick loans. The usual thing is that it takes a long time from when we request the loan until the money is in our account.