No Equity Home Loans Could Fix Leaking Roofs But Cost You A House

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No Equity Home Loans Could Fix Leaking Roofs But Cost You A House

If you could wish yourself somewhere else, you would. Bills are mounting, the roof is leaking, and you"re in the middle of the worst rainy season in recent memory. For the moment, however, you"re pressed for time and strapped for cash, and there"s not much you can do about these. Then, out of the blue, a lender shoves a mouth-watering offer at you, in the form of a no equity home loan. “Salvation," you think.

Before you jump in and take as much as the lender can give, take the time to mull over this question: is a no home equity loan truly the answer to your financing needs, There is a big gulf of difference between drawing on the value of your home when you get a no equity home loan and exceeding this value.

Consider the following before signing anything:

1. Can you take the risk,

Some experts see no equity home loan as a glossed-over nickname for a high loan to value, or LTV, home equity loan. An LTV loan is one where the loan granted will be equal to, or even exceed by as much as 25%, the mortgage value of your home.

2. Can you handle the interest rates,

Usually, a no equity home loan comes with high interest rates – say, 2 to 6 percent higher than the standard. However, while the rates of no equity home loans are typically higher, they vary depending on a host of factors, such as your credit status, the financing institution, interest rates prevailing in the market, and the loan"s structure.

3. Can you take on the added requirements,

In obtaining a no equity home loan, you must take out a private mortgage insurance, or PMI. This adds between 0.5 to 1 percent to your total loan. PMI covers the loan"s total amount that is more than 80% of your home"s total estimated value but not over 100% yet. This means PMI is tied to 20% of the secured portion of your loan.

4. Can you manage the tax implications,

Home equity loans with interests of up to $100,000 are tax deductible. If you have a spouse and both of you file separate tax returns, divide this amount by two. In high-LTV loans, no benefit like this applies. So, if you take out a no equity home loan, you had better be prepared for tax season because any loan amount in excess of your home"s actual value is not tax deductible.

5. Can you live with the inconvenience should you ever have to sell you home,

Suppose you have to sell your house on short notice. The house is valued at $200,000 and you owe $250,000 on it. You have a problem sitting on your lap, and it"s the same problem that"s lining your pocket. Failure to come up with the full amount you borrowed obviously causes default in your loan financing. Can you say bankrupt without wincing,

So, what now, Water still trickles down the roof, and your bills continue to pile up with clockwork precision. Loans may seem the only oasis in the financing desert, but applying for no equity home loan is not a practical solution to your financial woes. If you truly have to take out a loan to get that roof fixed, look for a hybrid of traditional home equity loan and unsecured personal loan. No equity home loans could fix the leak, but it might cost you a whole house later on.


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Jessica Post
Jessica Post
07:52 18 May 17
Wayne is very thorough and accommodated all my annoying questions like a champion! He was also able to complete the inspection quickly and provided his report in a timely manner. Highly recommend.
Kai Ikeuchi
Kai Ikeuchi
11:24 23 Mar 17
Wayne was very professional and assisted us quickly. We required an inspection with a turnover of 2 days. He was able to provide us with the relevant information so that my fiancé and I could make a better decision when bidding for our future house. Thanks to Wayne and Inner West Property Inspection, we were able to be confident with our decisions.
Genevieve McCabe
Genevieve McCabe
15:14 14 Feb 17
I just had my home inspected by Inner West Property Inspections this week and the peace of mind is worth every cent. I am buying an older inner west home and Wayne was skilled, patient and thorough. I highly recommend this service.
Karen L
Karen L
08:45 13 Feb 17
Wayne was punctual, polite, and neat and tidy. Very professional. He answered our questions and provided a great inspection report that we passed on to our solicitor. Would highly recommend him to anyone looking to have their future home inspected. Karen L, Ashfield
Gary Williams
Gary Williams
07:43 15 Feb 17
Inner West Property Inspections inspected a house I was looking to purchase in Marrickville. Wayne showed up on short notice as the auction was in 2 days. He provided a great, detailed report and called the next day to clarify something. Top level service and knowledge! Gary Williams, Marrickville
Andrew Gee
Andrew Gee
20:42 24 May 17
Wayne provides an excellent service. He explains any issues in terms that the clients can easily understand and offers real world advice on how to go about any repairs or rectification works required. The ultimate professional in his field, and a really nice bloke too!
Nasir Shah
Nasir Shah
11:46 21 May 17
Wayne was fantastic. Not only did he perform a very thorough inspection, but the turn around time was incredibly fast. He is an absolute professional, and offers a first class service!
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