Can I take out a $20,000 loan against a paid off house?

Can I take out a $20,000 loan against a paid off house?
0.0 0.0 0.0 0.0 0.0 0

#1

I would like get a loan for $20,000. Can I borrow against my house, which is fully paid off?
I retired through disability. I have guaranteed $1000 a week income from a SMSF, which I can’t take money out of. Hence the need for the loan advice.
Where do I stand on getting a loan?


#2

It depends on the appraised value of your home.  Your first step is to visit your local bank and ask them about a Home Line Equity Line of Credit (HELOC).  They can then walk you thru the process with current rates, maximum amount you can borrow and the terms of the loan.  It's a pretty simple process and can be done relatively quickly.  Good luck.


#3

I would suggest talking to your bank about a Home Equity Line of Credit (HELOC), not a home equity loan. With the HELOC, you do not get charged any interest if you don't take a draw against the line of credit, so unless/until you take money out, you won't accrue or have to incur interest charges.

At the most basic level, with a home equity loan, they send you the money and the interest accrual starts immediately. The HELOC provides more flexibility since you can take only what you need at a given time, and don't have to pay interest on more than that.

There are other rules and requirements with either one, so be sure to get all of the information about the payment requirements, etc. prior to signing.

If you wish to open a HELOC or get a home equity loan, I would suggest starting the process as early as possible in relation to when you will first need the money, because while it can be a relatively efficient process, it does still take some time (it could take 30-45 days in some cases from the time you apply until they open the HELOC to where you can draw on it).

One thing to keep in mind with either option is that if you fail to pay on time per the terms of the loan/line of credit, you could face foreclosure since your home will secure either the home equity loan or the HELOC.

Hope that helps and best of luck.


#4

This thread has been closed. Have a financial question? Log in and ask our community!