Raising Capital Through Home Equity Solutions

There are useful finances tied up in your home that could prove effective as funding sources for a small business or other project.

There are multiple ways that your average home owner can unlock the potential capital tied up in their biggest asset. As a property owner, you can use your home as proof proper for bankers and lenders that you are able to pay them back. Nobody is suggesting that you offer your home out as backup on a risky deal – but it does allow you to secure asset-backed funding for other projects.

When you raise capital through your home, lenders won’t limit you by the scope of where you apply those funds as you were before you were a home or property owner. This gives you the freedom to expand your property portfolio or continue with other investments.

Here are some of the ways you can raise capital through home equity and asset-backed financing.

Ways to Raise Capital Based on Property Ownership

There are options on the finance market available to the homeowner that tenants simply don’t have access to. Here are some of the best finance products to unlock the potential capital held in your property.

1 – The HELOC

The HELOC stands for Home Equity Line of Credit. This type of loan allows you to borrow up to 80% of the value of your home. You must take away the amount you still owe on the mortgage from the total amount you can borrow. Say you owned a 200k home and you owed 50k on it. You could borrow 80% of the 200k (160K) minus that 50k. Your total loan amount achievable would be £110,000.

The HELOC is available in the USA and Australia but recently crossed to the UK. The well-known firm Selina Advance are currently providing HELOC solutions to British residents.

2 – Consider a Remortgage

Due to the economic uncertainty of the last few years, the finance world has been in upheaval. There is one thing that has kept its value over time, though, and that’s your home. In fact, during Covid-19 the housing market boomed. Depending on how long you have had it for, your home could be worth much more than it was before.

Remortgaging your home could free up money each month and even boost your savings pot. This is an effective way to borrow against your home, especially if you want to live a little in later life. We prefer the HELOC simply because you are unlocking the financial potential your home already has rather than striking a new deal.

3 – Equity Release

Equity release schemes are popular among older couples who are into their retirement years. An equity release scheme is a type of finance that encourages you to borrow the money tied up in your home based on the premise that lawyers will sell your home off in your latter years. If you plan on moving to assisted living, if you don’t have family to take over your property, or if you already have inheritance to leave any offspring, then equity release makes sense.

Your Property is Your Asset

Your property is an important asset regardless of your stage of life. Be sure to use it to its fullest potential.