How to qualify for the best home equity loan rates

Home equity loans allow homeowners to borrow against the value of their property that they already own. It's similar to taking a mortgage on the amount of your mortgage you have already paid for. Getting the best home equity loan rates depends on your personal situation and how much your equity on your property is worth.

Personal credit score

The higher your credit score, the higher the chances you can access home equity loans best rates. Shop around Since a home loan for equity is quite a big investment, it pays shopping around different banks and mortgage providers to see who offers the best rates for your circumstances. Use the Internet to your benefit, and check comparison websites offering home equity calculators, equity loan calculators or home mortgages online comparisons. Pay off debt on time If you have outstanding debt, make sure you pay your monthly installment on time. Lenders will look at your paying history and if you don't seem to be able to keep up with your existing liabilities, you will be considered to be taking a high risk. Get a joint loan If your credit rating isn't so good, you may try to get the loan with somebody else backing you, such as another member of your family with a better rating. Marry and get a permanent job Generally speaking, banks consider married couples less risky than single ones and people on full-time jobs less risky than contractors or small business owners. While this doesn't mean you should find a partner and change jobs before getting your loan, consider if it's worth for you to sign those papers and to wait a bit before going self-employed.

Your house value

You may be able to raise the value of your home and so reduce the percentage of equity you are borrowing against, hence helping you find better rates. Paint and finish your DIY improvements You can make your home more valuable by painting it, fixing things such as insulation or finishing those home improvements that you are always leaving for later, before asking for a valuation of your home. Get a new valuation If you have owned your property for a while and made improvements to it, it's time to get a third party valuation to see how much is your equity actually worth. For example, if you bought it for £200.000 and have paid up to £100.000 you'd have a 50% equity. But if your home is now valued at £300.000, you actually own 66% of it. This can reduce your loan to value ratio and allow for lower interest rates.