The best home equity providers are there to help you unlock the potential goldmine you're living in – your property. From home equity loans to lines of credit, through a HELOC, there are options to convert your property into a personal source of immediate cash.
If you need more than a personal loan or that which credit cards can offer, or simply want to get a better rate, then home equity could be for you. The first option, a home equity loan, is ideal for large sums of cash whereas a HELOC, which lets you borrow money several times, is better to manage cash flow for things like home improvements.
The amount of money you have access to depends not only on the value of your house but the size of your mortgage as well as your credit score. All that is used to work out what you can borrow with different rates to suit varying situations.
Before you apply for a home equity loan it's worth thinking about if it's the best option for you. Because it's your house that is being used as the collateral there is a chance you could lose it. If you fail to repay the owed amount it will be taken out of your home, meaning the lender could have the right to sell your home to access that value.
So what else do you need to think about when considering home equity finance?
Compare home equity deals
A great place to find all the best home equity deals is Lending Tree which helps you search through all the options out there. This marketplace for home equity is full of fantastic deals and savings to be had with the ease of a one-stop-shop style search. Compare deals here.
How we review
For each individual product we apply a set of testing parameters to make sure the end result is clear and comparable to other offerings. So in the case of home equity, points are awarded or deducted on:
- What it offers (features and flexibility – range of payback dates)
- Whether or not it's accredited/regulated by appropriate third parties
- Transparency of the terms and conditions
- Average amount of savings
- Knowledgeability of the debt advisor the reviewer spoke to (secret shopper)
- Customer service – taken from user reviews
- User reviews – from reputable sources
- Awards – from reputable sources
- Ease of use – website/app
How to choose the best home equity provider for you
One of the best places to start when considering the home equity provider for you is by deciding if you want a loan or HELOC. That should narrow it down initially.
Next, the amount you need to borrow may be a factor since some providers are more willing to deal out larger sums than others. Then, of course, you'll need to consider the rate charged and any additional fees that might apply like application fees or closing costs. Fixed or variable rates are also worth taking into consideration when working out costs.
Loan length is another factor since spreading the term over a longer period could mean borrowing greater amounts and paying it back in smaller instalments.
Other factors to consider include ease of application, online resources, personal banker option, customer service and any possible discounts you may be eligible for.
Home equity loans from Discover are some of the best available thanks to this big bank's range of offerings. That includes a personal banker, long term repayments of up to 30 years, excellent interest rates at great range from $35,000 to $200,000.
You will need a credit score of 620 or higher to qualify as well as a maximum debt-to-income ratio of 43 percent. The average applicant will need at least 10 percent equity left but for those with high credit scores it's possible to go as high as 95 percent Customer LifeTime Value.
The online application process is easy while the personal banker makes the service uniquely tailored with a great way to get questions answered when you need. The only downside is that Iowa and Maryland are excluded from this loan option.
If you don't need a big lump sum all at once but would rather an open line of credit, a HELOC could be for you and Wells Fargo offers one of the best. This Home Equity Line of Credit has a low minimum draw amount of $300 and there's a discount for existing Well Fargo customers. Expect a starting base rate of 4 percent APR variable but there are options to cap the interest rate increase.
Online application is simple with a useful application status tracker. But you can also apply over the phone or in a bank branch. Any problems and customer services are available online, over the phone and in person.
The Bank of America HELOC offering has no application fees, no closing fees and no annual fees, plus the rates are excellent starting at 3.49 percent variable, although that climbs to 5.40 percent after a year. That's where it gets a little complicated as you can save 1.50 percent in 0.10 percent increments each time you withdraw $10,000 upon opening the account.
The application process, however, is really simple and can be done online before you're contacted for a chat about what's needed to get you up and running. This HELOC offers good rates, is flexible and is backed by great customer support that, admittedly, could be easier to reach on the phone.
Citizens Bank offers both home equity loans and home equity lines of credit (HELOC) both below the average rate. You won't have to pay any application or closing fees and the loans are available in 22 states across 1,000 branches.
You will need to go in branch as the application process can be started online, where there is a wealth of information, but the final sign off is done in person. The advantage here is that you get to chat it over with a well informed professional and can get your money in as little as 30 days. Credit scores required are the national average so yours will need to be reasonable to take advantage of these low rates.
Chase offers HELOC options rather than lump sum loans, although there are ways to take out that HELOC in a one-time lump sum. If you already have a Chase account you can recieve a 0.25 percent discount, another 0.25 percent if you can show contracts or bids on home improvements and another 0.12 percent if you setup automatic payments.
You will need to pay fees like origination and annual fees of $50 plus closing fees, in some states. You'll also need a maximum debt-to-income ratio of 50 percent. If you qualify you could have your money in as little as 45 days.
TD Banks offers home equity loans and HELOCS with average rates and fees but what's special is that it has higher loan amounts than some of the competition. The maximum loan-to-value ratio is a huge 89.9 percent with either fixed or variable rate options.
You can start the application online but need to finish in store and since TD Bank is only in 15 states this may not be an option for some people. Check the website to see if you can apply and to read up on lots of useful information about home equity. Features like an emergency overdraft facility for HELOC users is a nice touch you'll find listed on the site.
Alliant Credit Solutions offers HELOCs only but in most states and with no minimum equity requirement. This is great for those that may not be able to get credit anywhere else. The variable rate sits at 4.25 percent but to get this you'll need to be a credit union member. Applications and customer care is done online, unless you live in Chicago where the only physical branch is setup.
Loan Depot is an online-first company that offers HELOC services only via 150 partner lenders across the country. Rates range from a low 4.65 percent variable up to 18 percent for those with lower credit scores. While you can go into a branch for a face to face chat and application, it's also easy to apply entirely online, quickly, thanks to digital documentation verification.