The "equity" in your home is the amount you still owe on your mortgage minus the current market value of your home. For homeowners who have been paying their mortgage for a long time or who have paid off their mortgage and own their home outright, this can add up to a large amount. This amount of money is, in a sense, "locked in" to your home. With a home equity release loan, you can get access to that money and use it for whatever you want.
The most important thing to remember, though, is that this way of getting money isn't for everyone. Careful thought needs to be given to it because you could put your home at risk if you don't know what it involves.
There are many different reasons to take out a home equity loan, but most of the time they are used to pay for large home improvement projects or major home renovations that will add a lot of value to your home anyway and might even make you more money in the long run than the cost of the loan.
In other situations, an elderly person or a couple with a low income may need to raise money to pay their monthly bills. They may have paid off their mortgage in full and have no children to worry about when it comes to leaving an inheritance, or they may have children but not want to give them any of their assets when they die. Even in these situations, a home equity loan might be their best choice. After all, they worked hard to buy their home in the first place and have now paid it off. So, as an asset, it is worth a lot of money, but it is tied to the value of their home. This is a typical case of "having a lot of money on paper but not having enough money to live on every day."
You can't say enough, though, that a home equity loan isn't for everyone, and if you're thinking about going this route, you should talk to a professional.
