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Home Equity

For free and impartial money advice and guidance, visit MoneyHelper, to help you make the most of your money.

You might be able to borrow against your home equity to unlock larger loan amounts at competitive rates. 

Home equity can be calculated by subtracting the value of secured debts against your home (e.g, a residential mortgage) away from your property’s current market value. You may qualify to borrow against some of your home equity to help with home improvements, debt consolidation, further (property) investments or for another purpose. This is possible by taking out a loan secured by your home, such as home equity loans, HELOCs, homeowner loans, home improvement loans or remortgaging to release equity.  

The pros

  • Secured loans that use your home as collateral may enable you to borrow more than what is possible with an unsecured loan
  • Home equity loans and similar may offer a more competitive interest rate compared to unsecured borrowing
  • Secured borrowing against your equity may be easier to get approved for, even if you have a lower-than-average credit score

The cons

  • Your home can be repossessed if you fail to keep up with home equity loan repayments
  • Some home equity loans have expensive setup and arrangement costs
  • Some home equity loans have expensive early repayment charges and closing costs

More information on home equity

Homeowners can borrow against their home equity in a wide variety of ways. As such, it is difficult to know which is the best home equity loan to choose. MoneyNerd helps you differentiate between the different home equity borrowing methods and provides detailed information about home equity. Read our free guides for insights, tips and guidance.