In simple terminology, a home equity loan is a loan taken against your house. A home equity loan is also called a mortgage or a second mortgage. Another synonym for home equity loan is equity release schemes.

While taking a home equity loan you are actually borrowing the worth of your house. If the house is completely owned by you, then the term used for home equity loan is “mortgage”, otherwise if your house is not fully paid off but has equity, it is called a “second mortgage”. From now on we will use one term for both to facilitate better understanding. We will call them Home Equity Loans.

A home equity loan is an extra loan that you take against your home in addition to your mortgage; hence this is called a second mortgage. This enables a home owner to encash equity without refinancing the first mortgage. Most people are under the impression that the only way to raise cash is by selling their homes. However reality differs and factually one can take a second mortgage to free up the first mortgage also.

Equity is the difference between the amount you owe on your current home mortgage and the current value of your home. Furthering this definition, suppose you sell your home, the amount of cash left in your pocket after paying off the mortgage is called Equity. This equity when taken as a loan from a lender, without actually selling your home comes to be known as home equity loan.
Many lenders or loan companies allow you to borrow bigger amounts calculated by subtracting the balances of outstanding mortgages from 125% of the market value of your home. However the actual equity is the difference between appraised worth of your home and the balances of your outstanding mortgages.

There is no bar on how you can use the home equity loan. You can use it for any purposes as it suits you. A home equity loan is usually a one-time fixed interest rate loan, which is paid out at one go.
The rates of interest or the cost of the loan will depend on options you choose viz. the term of the loan and the amount; of course another important factor has always been your credit rating. The longer the term of the loan, the more you pay out as interest, also if the amount is more, the more interest you pay. As always with any liabilities one undertakes certain words of caution are advised.

Check all your options thoroughly before making a decision. Choose the amount carefully and take only what you need and specify the term which you think would be comfortable for you to repay in. No point accumulating liabilities in exchange for spending on pleasures or acquiring unnecessary assets.
Home equity loans are easily accessible to people with poor or bad credit rating since the lender is taking a lesser risk as the loan is secured against their home.

A Home Equity Loan usually means that you get the best interest rates on the loan, i.e. you get the loan at a lesser cost compared to other loans because of assured security, but one should always remember that the house is at risk lest you fail to repay the Home Equity Loan.

Tags: home loan

A great deal of energy is expended by many of the largest business corporations persuading us that they are truly committed to providing excellent customer service. If my experience is shared by other consumers looking for reasonable service from businesses, then these claims are hokum. I am writing this from an Australian perspective, so mentioning specific names is pointless, but I will give some examples of what I have experienced.

A large department store chain is struggling to keep pace with its main competitor. The retailing group owning the department store chain is considering selling off the business, since they cannot see the solution to the poor performance. I have shopped at this department store. One time, I found entering the store to be an eerie, almost surreal experience. There were no people. Eventually, a few staff members and customers ambled into view. I asked for directions to find a product, and was told ‘to the left’ with the wave of an arm, and no eye contact. A little later, I had to wait for the privilege of paying for the item. Staff morale was obviously at rock bottom, and it was no fun to shop there, so people did not bother. Any senior executive could surely have seen and sensed what I did. Too obvious, I guess.
The telephone company had a promotion which involved telemarketers calling and offering a deal that included a free cell phone. When I received the call, the telemarketer was based offshore, and had a heavy accent. To make matters worse, the telephone line was appallingly bad – I could barely hear what was being said. When I said I did not want a free cell phone the telemarketer demanded to know why not. I ended the call as politely as I could. For a telephone company to market its services over poor phone lines with a telemarketer who wants to argue with potential customers simply defies belief.

I was in one of our major banks, and overheard some conversation from the staff behind service desk. One of the staff, obviously experienced, was dealing with what appeared to be a young customer. She seemed flustered. When the ‘customer’ left, her colleague leaned over and said ‘that was a shopper’, to which she replied ‘I thought so’. The shopper was a phantom customer, used by the bank to check if the staff members followed the prescribed formula to deal with a customer. This branch of the bank dealt with customers who were both wealthy and of advanced age, some a little eccentric. To use the formulaic approach would risk driving them away.

We humans are a gregarious species. We enjoy communicating with our fellows - we need to be needed. We are hard wired to cooperate, so helping one another should come naturally. But no, decision makers, out of touch with day to day life, seem to come up with formulas to better what we do naturally. As I said at the start – hokum.

Tags: service