In short, if you're a home owner and are after some serious cash, then a home equity loan could be the best option for securing it. Home equity loans, also known as equity release, are calculated from what your house is currently worth to what has already been paid back.

There are many reasons why people may choose to go the home equity loan route, including: buying a new car, putting the kids through university, consolidating old debts and indeed, building a new extension to the house.

You could even re-invest the money from the home equity loan into an annuity-based plan to hopefully earn you some extra cash and at the same time cover the loan repayments. Simply put, the choice is yours what you do with the money.

It pays, however, to do some research in order to find the best lender with the most favourable repayment options. Interest rates may differ from lender to lender, yet rates are generally much less than the interest rates for standard loans, as there is minimal risk to the lender.

Common Sense

Now here's the bad part; you may also be putting yourself at risk when borrowing money based on the equity of your home. Unfortunately there are s

ome unscrupulous lenders out there who know you cannot even afford your mortgage repayments, yet will still try to sell you a home equity loans package.

They will often advise you to pad out your income on your application form so that you will get the loan approved. Furthermore, there may even be hidden charges in the loans package. What these people are trying to do is to get you to put your house on the line and struggle on your repayments so that you lose the house.

So, keep your head; if you are already struggling to meet mortgage repayments and are offered a home equity loans package, you are more than likely being set up.

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