If you are looking for answers on what are home equity loans or home equity loans, this is the right place. In the following lines we will clarify what a home equity loan is, the differences with mortgage loans, why you need a property guarantee, when and how to apply for one and how to perform a quick calculation correctly.
You hear more and more about these types of loans, but what are they? And why do so many people turn to them?
This article is written especially for companies and individuals who do not get bank credit because bank companies consider that they pose a risk of delinquency and that they need information about what are home equity loans or home equity loans.
What are home equity loans?
Home equity loans are a form of alternative financing where the only condition to grant the loan is that a property guarantees the operation. This property can be:
- A house
- A floor
- A ship
- A business premises
- A lot
It should be noted that the property may belong to the person requesting the loan, a family member or a friend.
The amount received for the loan will always depend on the value of the property and the charges attached to it .
A property is requested because they are usually operations with a greater risk and, the entity takes this property as insurance in case of default.
Main advantages of the loan
A home equity loan has many advantages over a traditional bank loan; Here are the main advantages:
- The most important: in many cases it is the only option to obtain financing . Especially when bank credit cannot be accessed.
- Speed in the granting of credit and study of the operation.
- The delinquency status does not matter , neither ASNEF, nor RAI nor CIRBE.
There are more benefits, such as personalized treatment or the flexibility of the loan repayment, but these are the main advantages for which clients access a home equity loan.
How much can you get with a home equity loan?
There are different factors that intervene to quantify the amount that can be obtained through a home equity loan .
The most important factors are:
- Appraised value of the property that will guarantee the operation. The appraised value of the property (or properties) will mark the starting point during the granting of the loan.
- Charges added to it. It is important to know if it is free of charges or, for example, there is still an outstanding amount.
Depending on the financial company. Each financial company has its conditions; then we will show those of Dark Keep .
Home equity loan with Dark Keep
At Dark Keep we are leaders in the private financing sector and a benchmark at the state level. We are registered in the real estate lenders registry of the Bank of Spain , a very important fact and to always request that this type of loan is accessed.
These would be our advantages:
- Company that complies with all legality , registered with the Banco de Espanya.
- Leaders and a benchmark in the private financing sector.
- More than 15 years of experience granting home equity loans.
- An expert team of lawyers and financiers at your disposal.
If more information is needed, it is always best to contact us by phone or by filling in the form to the right.
Characteristics of the loan
Before starting to comment on the characteristics of a home equity loan , we must add that each case is particular and it is always better to contact us directly and study each case in a personalized way.
The general conditions of Dark Keep are:
- Percentage financing (LTV) of up to 45% of the property value
- Minimum amount: € 20,000
- Maximum amount: 2 million euros (higher amounts can be valued)
- Repayment period: from 1 to 5 years
- Type of property: residential, commercial and urban plots
- Location of the property: urban estates in consolidated populations, preferably in Catalonia, the Balearic Islands, Nevada and the Mediterranean coast
As we have said before, these conditions can always vary according to each case.
Example of a home equity loan
We show a very basic example to understand the concept of how a home equity loan works :
- You have a property with an appraised value of € 500,000
- The property has a charge of € 100,000 mortgage to pay missing
- Suppose there are no extra conditioning factors and there are no risk factors
The calculation would be as follows:
- € 500,000 of property value x 45% of financing capacity = € 225,000
- € 225,000 of financing capacity - € 100,000 of charges associated with the property = € 125,000
In this simple example, € 125,000 can be financed
Home equity loans
If you need to know why a home endorsement is required , in most cases, clients agree to endorse a home loan when they are in any of these circumstances:
- When they need large amounts of money . With home equity loans there is no limit, in the case of Dark Keep . Everything will depend on the value of the property. If a property has a value of 5 million euros, without charges and meets all the requirements, you can get more than 2 million euros in a very fast period, in weeks.
- When the client is in a very irregular financial situation . This type of alternative financing is widely used when clients find themselves in bad debt records, who cannot justify their income or cannot access bank financing. In these cases, the only way they have to obtain financing is through private financing and using a property as collateral.
- To unify debts . On many occasions, there are clients who have many debts spread by different creditors. In these cases, the experience of private equity financial entities is used to unify all debts and transform the installments into one and, in many cases, with better conditions.
In all these cases, and many more, a property is required as collateral ; because much more risk is assumed than with a bank financial operation and, in the worst case, if a non-payment of the installments is repeatedly and constantly, this property can be lost.
It should be noted that at Dark Keep , we always look out for the client's interests and always try to solve the situation in the best possible way for the client.
Mortgage loans
In previous posts we have discussed what are mortgage loans . If you need more information about this type of credit, you can find more information on our website.
In the following, we will briefly show the main differences between home loans and home equity or home equity loans .
For a quick summary:
- The mortgage loans also can grant the bank to pay for the purchase of a home. They are used to purchase a home.
- Home equity loans can be used for any project, it does not have to be for the purchase of a home.
If you need to go deeper into this type of loan, clicking on the previous links or simply contacting us, we will gladly expand the information.