You can get a short-term home equity loan if you have an existing mortgage or already own your home. For instance, having a mortgage loan of 50 per cent of your home's current value makes short-term home equity loans an attractive option because they allow you to access a portion of the equity you own.
A short-term loan doesn't have the same rates and terms as a traditional mortgage. However, it can be an excellent way to access your equity while you're paying off your current loan or consolidating your debt.
The Benefits of a Short-Term Home Equity Loan
1. Easier Qualification
You might qualify for a home equity loan from a bank if you meet the bank's lending criteria. However, financing is more challenging if you don't have any equity in your home. In that case, you need a short-term loan, which is easier to qualify for.
2. Easy Equity Access
You can quickly access the equity in your home if you need the money for short-term use. For example, you can use it to consolidate debt or make home improvements.
3. Consolidate Debt
You can use a short-term loan to consolidate debt. For example, if you're paying a home equity line of credit (HELOC) off, you can apply the amount of your HELOC to your existing mortgage instead of getting a second loan.
You can also consolidate credit cards or other unsecured debt. Then you can make one or more regular payments that are significantly lower than the total amount you owe.
4. Fast Funding
You can get a short-term loan in as little as 30 minutes. You can get one over the phone, in person, or online. If you're approved, you can have the money as soon as the next business day.
5. Short-Term Loans
A short-term loan is designed to be repaid in a short period. For example, most short-term loans have a term of six months to one year. This gives you some flexibility to temporarily access your home's equity without committing to a long-term mortgage loan.
How to Apply for a Short-Term Equity Loan
Many banks and other mortgage companies for short-term loans. The application process is similar to a traditional mortgage loan, though the approval process is generally faster.
It's also easier to qualify for a short-term loan. That's because you don't have to have 20-per cent equity in your home to be eligible as you do with a conventional mortgage.
But some banks have higher interest rates than conventional mortgages. That's because they have less security against you paying off the loan. So you'll need to weigh your interest rates against the interest you'll earn on your investment.
You'll need to apply with the lender, provide the necessary documents, sign some paperwork, and make any required disclosures.
Conclusion
A short-term home equity loan is a helpful way to access your home's equity without having to get a mortgage loan. It's a good option if you don't want to make a long-term commitment or meet the bank's mortgage qualification standards.
You can use a short-term loan to consolidate your debt, pay for home repairs or improvements, make home improvements, or even renovate your home.
Wealthy You is an Australian Mortgage Company servicing Sydney for almost a decade. We can offer you various mortgage solutions to meet your specific financial needs. As an alternative lending specialist, we make refinancing your home simple. If you need home equity loans in Sydney, get in touch with us! Let us know how we can help.
