Home equity has never been so easy.
Homeowners are in the unique position of unlocking greater financial prosperity through using their home as an asset. The HELOC is a new method of doing this in the UK, although it has seen use in other countries previously. We investigated some of the best ways to use your Home Equity Line of Credit, should you wish to make home improvements or fund a new start-up.
Table of Contents
Understanding the HELOC
This funding method comes from unlocking home equity during your lifetime, allowing the borrower to unlock up to 80% of the cost of their home, minus what they still owe on the mortgage. The grander the home, the larger the potential loan allowed. The user pays a single price on the financial product and proceeds to pay interest only on the amount they borrow. With a HELOC, it is possible to borrow £20k of a £250k property valuation, without paying interest on the entire potential loan amount.
The Best Ways to Use Your Home Equity Line of Credit
Now that we all understand how the HELOC works, lets discuss some excellent ways to use this newfound wealth.
The Home Upgrade
The most obvious and potentially rewarding use of your HELOC is to make home improvements. If you are tactful about which improvements to make to your property, you can increase the resale value of your home. This does two things. It protects and improves your initial asset-based investment, and it increases the sum of the Home improvement loan you take out, should you use the product again in the future. If you want to make money from your property, there’s no reason why you shouldn’t do this.
The New Business
There are no limitations on what you choose to use your new funds for. If you have a fantastic start-up business idea, the HELOC allows you the capital to set yourself up. Provided your business doesn’t need a whole lot of equipment from the get-go, you may find you have more than enough to fund the whole project yourself. We don’t need to tell you what the benefits of fully backing your own successful business without the aid of external lenders is. The only advice we have here is to make sure you don’t fail.
Paying off Tuition Fees
Tuition fees is a common use of the HELOC. If you have a large home and a child going through further education, you can pay the lump sum on the tuition fees outright, then repay it using the HELOC product. This gives you access to a lump sum of cash whenever you need it, and for whatever you need it for.
Lump Sum Payments
Put simply, using your Home Equity Line of Credit, you have access to a huge pot of cash whenever you need it. It’s there for emergencies, it can furnish a new flat, it can buy a new property, car, or home improvement. However you use it, the HELOC should improve your quality of life. When you sue it correctly, it can even help you generate more income.