Debt Repayment through Home Equity Loans and Personal Loans

There are several ways to consolidate debts and choosing the best consolidation method will depend on the borrower’s situation. In this article, let’s talk about Home Equity Loans and Personal Loans– two types of financing that can be used for debt repayment.

HELOC or Home Equity Loans

All kinds of unsecured debts such as credit card debt, medical bills, and personal loans can be consolidated by applying for a Home Equity Loan. This type of loan is secured using the collateral submitted to the lender. As the name implies, the amount of financing available will be based upon the value or the equity of the borrower’s home.

Like all secured loans, there is the risk of losing your property to your lender should you fail to keep up with your payment obligations. Once a notice has been sent, the house will be put up for resale and the proceeds will be used to pay off the borrower’s balance.

What makes a Home Equity Loan different from other types of secured loan? Once the borrower has been approved for HELOC, he/she can borrow cash from the lender at any time without having to reapply for a loan as long as the equity limit has not been reached. Repayment will start after a certain period stated in the contract.

Debt Consolidation Personal Loan

Personal loans can also be used for consolidating debts. Usually, these are loans secured by the borrower’s property. If you are a homeowner and you are willing to submit your home as collateral, then you may consider this option.
Once approved, the loan amount will be given in full, which the borrower can use to pay off all his/her existing debts with various lenders. Afterwards, the borrower must abide by the debt consolidation loan company’s terms.

Should I Use Loan to Pay My Credit Card Debt?

In some cases, loan consolidation can be a viable solution to get out of credit card debt. The important thing to remember is that both a Home Equity Loan and personal loan are secured with collateral. Hence, there is always the risk of losing your property if you fail to keep up with your lender’s repayment terms.

With this in mind, paying off credit card debt through a loan is a very serious matter. Before you make a decision, consider if there are other alternative solutions that will not require you to put any of your properties on the line. If you feel that acquiring a loan is the only way, make sure that you will be applying for one from a reliable lending company and that you will be able to pay back the loan on time.

Elizabeth Roberts

Elizabeth Roberts

Liz Roberts and her team are continuously providing information to people who are ready to repair their credit and improve their credit score. Also NewHorizon.org team strives to empower the homebased and small business owners by bringing information that can help them to manage and grow their businesses. Let our 24+ years of business finance experience help you to get the financing you need! CONTACT US if need financing for your business.

We will be happy to hear your thoughts

Leave a reply

NHBS Inc © 2024

NewHorizon.org is an independent, advertising supported website. The owner of the site may be compensated in exchange for featured placement of certain sponsored products and services, or your clicking on links posted on this website. NewHorizon.org has not reviewed all available credit card offers in the marketplace.

Privacy Policy Terms of Use

NHBS Inc © 2022

NewHorizon.org is an independent, advertising supported website. The owner of the site may be compensated in exchange for featured placement of certain sponsored products and services, or your clicking on links posted on this website. NewHorizon.org has not reviewed all available credit card offers in the marketplace.

Privacy Policy Terms of Use

Business Loans

Consumer Loans

New Horizon
Logo
Enable registration in settings - general