Home equity loans are fixed rate home loans that allow you to tap into the money (equity) you’ve already invested in your home to finance debts or other purposes at a lower interest rate than most revolving credit options.With house valuations increasing considerably over the last 10 years many UK homeowners are unaware of equity loans as a way of raising finance.For example if you are a homeowner with a house valued at £300,000 and you have an outstanding mortgage of say £100,000 you can use the difference of £200,000 as equity to take out a loan. A Home Equity Loan can be really useful if your existing mortgage lender will apply a redemption penalty if you wish to change your current mortgage. If you don’t want to pay this penalty a remortgage will not be possible so a home equity loan, which is independent of your original mortgage company, is a viable option.Taking out a home equity loan online from is a much better option than selling your home to get the money. If you sell your home, you will be left with a lump sum of cash after paying off your mortgage. A home equity loan allows you to get that cash without selling your home.One of the main benefits of the home equity loan which sets it apart from other loans is with this kind of loan the interest rate is likely to be lower (if not the best rate loan) as the lender has the guarantee that you can pay the loan back because of the equity in your property.Although a home equity loan has many benefits you should also be cautious before taking out such a loan. Because it is still a secured loan with the property as collateral, a Home Equity Loan generally has lower interest rates. For the same reason, Home Equity Loans can be risky, because if you default on payments then you put the property at risk of foreclosure. The homeowner must also be prepared to pay off the loan balance when the house is sold.Some lenders have stopped offering home-equity lines of credit and home-equity loans altogether, even to borrowers with good credit. And lenders that still offer these types of loans are being a lot more selective. The lenders that have cut back on home-equity loans and credit lines are mainly those that raise money by selling the loans to investors. And since the recent issues with sub-prime loans the lenders are being extra cautious about offering these types of loans.ConclusionAn equity loan may not always be the best solution to all of your financial problems. However a home equity loan can become an important part of short-term financial planning. And, once the loan is paid, you’ll have the satisfaction of knowing that you’ve once again proven your credit worthiness.