If you have some equity in your home, you might want to consider a secured loan. Secured loans use assets, such as your home as collateral, and they may have lower interest rates, higher credit limits, and longer repayment terms. Secured borrowing can be a good option if you want to use the equity you’ve built in your home as collateral.
The amount you may be able to borrow is based on many factors, including your credit history and the available equity in your home. The amount of home equity you have available is the difference between what your home is worth and the amount you owe on your home and other outstanding obligations that are secured by your home.
To calculate your available equity:
- Calculate an estimate of your home's current market value. This would be what you would sell your house for if you were to sell it today. You can find many resources on the internet to help you with your estimate.
- Multiply your home's market value by 80%. It's recommended (and required by some lenders), that you keep at least 20% equity available in your home.
- Determine the amount of the outstanding debt secured by your home. This would include the amount you owe on your mortgage and any existing home equity financing debt.
- Subtract the outstanding debt from 80% of your home's value. This will give you an idea of the equity in your home that may be available for you to borrow.