Can You Get a Home Equity Loan with No Mortgage?
Representative example: If you borrow £34,000 over 15 years at a rate of 8.26% variable, you will pay 180 instalments of £370.70 per month and a total amount payable of £66,726.00. This includes the net loan, interest of £28,531.00, a broker fee of £3,400 and a lender fee of £795. The overall cost for comparison is 10.8% APRC variable. Typical 10.8% APRC variable
Representative example: If you borrow £34,000 over 15 years at a rate of 8.26% variable, you will pay 180 instalments of £370.70 per month and a total amount payable of £66,726.00. This includes the net loan, interest of £28,531.00, a broker fee of £3,400 and a lender fee of £795. The overall cost for comparison is 10.8% APRC variable. Typical 10.8% APRC variable
Are you keen to understand more about home equity loans? You might even be wondering if you can get one without a mortgage. You’ve come to the right place.
This guide will cover:
- What home equity is.
- The risks and benefits of home equity loans.
- The process of getting a home equity loan.
- How you can qualify for a home equity loan.
- The pitfalls of a poor home equity loan.
We know that understanding loans and finances can be tricky. That’s why each month, over 6,900 people visit our website looking for guidance on secured loans.
With our expertise, we’ll help you feel more confident about home equity loans.
Do I qualify for a home equity loan?
To qualify for a home equity loan you will need to have equity in your home and meet a lender’s additional criteria. The additional criteria will be determined by each lender and could be subject to age, residency, credit score and income.
To fully understand if you have equity and how much, you’ll need to know the current value of your property.
Can you have a home equity loan without a mortgage?
If you have paid off your mortgage balance and own your home outright, you should be able to access a home equity loan or HELOC. However, your application for a HELOC or home equity loan on a paid-off house will still be subject to checks and meeting lender criteria.
Homeowners choose to do this so they can access funds for various reasons, not limited to:
- Debt consolidation
- Home improvements and renovations
- Medical emergencies
- Big ticket purchases
- Pay for education
- Helping out family members
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Debt consolidation is one of the most common reasons people choose to release equity in their home. They use the lump sum to pay off other debts, such as personal loans and credit cards. They then only have to make single monthly repayments instead of paying back multiple creditors. But the main driver to do this is that the interest rate of the home equity loan is usually cheaper than what they’re paying on unsecured debts.
If you have no mortgage because you do not own a home, then you cannot get a home equity loan or HELOC because you have no home equity.
Lender |
APRC |
Monthly payment |
Total amount repayable |
|---|---|---|---|
| United Trust Bank Ltd | 5.99% |
£218.73 |
£26,247.92 |
| Pepper Money | 6.86% |
£220.24 |
£26,429.17 |
| Together | 6.95% |
£220.40 |
£26,447.92 |
| Selina | 7.5% |
£221.35 |
£26,562.50 |
| Equifinance | 7.7% |
£221.70 |
£26,604.17 |
| Spring | 10.5% |
£226.56 |
£27,187.50 |
| Loan Logics | 11.2% |
£227.78 |
£27,333.33 |
| Evolution | 11.28% |
£227.92 |
£27,350.00 |
Representative example: If you borrow £34,000 over 15 years at a rate of 8.26% variable, you will pay 180 instalments of £370.70 per month and a total amount payable of £66,726.00. This includes the net loan, interest of £28,531.00, a broker fee of £3,400 and a lender fee of £795. The overall cost for comparison is 10.8% APRC variable. Typical 10.8% APRC variable.
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Can you lose your house with a home equity loan?
It is possible to lose your house if you do not keep up with home equity loan or HELOC repayments. The lender may initiate foreclosure, which is a term used to describe a process where the lender recovers the money owed by forcing you to sell an asset used as collateral within the agreement – in this case, your house.
However, many lenders try to work with you to avoid this. They may adjust the loan terms to make repayments more affordable, meaning you keep your home but repay for longer.
If you are struggling to meet monthly payments on your original mortgage or a home equity loan, it’s important to start a conversation with the lender.
Is there an appraisal with a home equity loan?
Because the amount of equity you have in a home is determined by the current property value rather than the value at the time of purchase, there needs to be a home appraisal. This is when your property and land is valued. An appraisal protects the lender, but it also protects the homeowner when taking out a home equity loan. It stops them from borrowing more than the equity that they really have.
