The buying of your home is very likely to be one of the biggest decisions of you make in your life. Before you apply for a home equity loan, you must take the time to consider all the details and formalities that will come along with your loan. It is very important to consider all of your financial information, and realize exactly how much you will be able to pay back each month. The last thing you want is to be stuck with a home loan you are unable to make the repayments on.


When making the purchase of a property with another person (say, a spouse, partner or friend), and if it is the case that you are both working, both salaries will be considered. Often the amount available to you and your partner will be based on three times the amount of the main of the two salaries, in combination with one times the amount of the supporting salary. Lenders will take a close look at your salaries in order to ensure you do not take on a home equity loan more than you will be able to afford. Included in this consideration will be your past credit history, as well as the amount of debt you may currently have. If you are self-employed, you will be asked to provide approximately 2-4 years worth of receipts and documentation outlining your accounts for that period.

When shopping around for home equity loans, home mortgage loans and alike, it is crucial you understand all of the rates of interest and further responsibilities. There may be certain terms that you are not familiar with, and if so, it is your responsibility to inquire as to what these words and phrases mean. Whoever handles your home loan will be accustomed to clients with loads of questions. Don’t hesitate to make sure you understand everything you need to know, as well as all of your options.

Review your job history. If you have several recent gaps in your job history, or if you have changed jobs several times, lenders will be considering this in your application. Do what you can to make your employment past as presentable as possible. The amount of money available to you for your home loan will depend on these details, as well as any other financial information related to you, or your partner’s, financial past.

Home loan types

The provider of your home equity loan will help you decide which plan is best for you. However, it is always a good idea to do a little research on what kinds of plans are available, so that you can better understand the plans proposed to you. Briefly, here are some descriptions of the types of loans you might be considering.

· Repayment Home Loan: This is the most common, and is the simplest to understand. Repayment home loans work on a time-line basis, and unless there is a problem with your payment schedule, your loan will be guaranteed to be paid in full by the end of your commitment.

· Endowment Home Loan: This type of loan is paid bi-monthly. The first payment is for the interest on your loan, with the second being a fee paid to an insurance company for an endowment policy.

· Interest only Home Loan: This plan focuses on paying back the interest incurred first, leaving the capital owed to be paid at the end of the payment schedule.

· Pension Home Loan: This loan is also paid in two categories, bi-monthly. The first payment is for the interest on your loan, and the second is for a pension policy premium.