Loans are meant to serve different purposes. Home equity loans offer a fixed sum against the mortgage that you have. However, the value of loan that one can get depends on a number of factors, which includes the equity that the you have in your current mortgage and your credit rating. Home equity loans are basically of two types: On the one hand, there are home equity loans, under which you get a lump sum amount, while one the other hand, there are home equity lines of credit, under which you get the money in fixed installments whenever you require it.
Since these involve huge amounts of money and are considered safe by the lenders the interest rates offered on them are very low. Moreover, an individual can use the loan amount for any purpose they wish. In most cases, people take out a home equity loan for the purpose of debt consolidation, home improvement, and other such purposes. However, some use them for vacations and bill payments, too.
Bad credit personal loans, on the other hand, are short-term loans involving small amounts. These generally attract high interest rates when compared with home equity loans. They are generally taken out by people trying to meet short term money requirements.
One can find numerous lenders offering solutions online. Whether it is a home equity loan or a personal loan, there are various sites which offer details for loan products offered by different companies along with the interest rates and pay period.
Home equity loans are often taken out for large expenses. In some case, it is used to repay the current mortgage. Think about it this way. The value of your property rises with time. If you took out a loan 15 years ago for a period of 30 years, once you've made 15 years of payments, you've gained quite a bit of equity in the house. Lending companies provide a loan to the borrower based on this equity. You can use this money to repay other loans or even make a partial payment of the current loan.
However, there are a number of ways in which you can replace such home equity loans with personal loans. For example, consider home improvement loans. Home improvements generally involve huge expenses. But instead of taking out a large home equity loan and increasing your liability for a longer period of time and paying huge amounts of interest, you can break down your home improvement plans into smaller modules and take out smaller loans that cover just the smaller modules. One version of this kind of loan is a construction loan. According to the pros at A-Top Roofing & Construction, "These loans are designed to be paid back within a few months' time." This means if you need to put a new roof on your house, replace the windows, or build a swimming pool, you should do them separately, in smaller pieces. Next, you can take out an unsecured construction loan to complete the smaller home improvement projects. You should aim to repay the loans by the time you complete each module. In this way, you can avoid taking out a large home equity loan.
Use online calculators and available quotes to compare the loans offered by different lenders. You need to have a clear understanding with regard to the purpose of the loan because this forms the basis of your selection of the type of loan which will serve you best.