Banks are reporting a sharp increase in the amount of consumers that are seeking home equity loans. It appears as though most are doing so in order to get home improvements done, but at this time, experts are concerned that it may not be a good idea to get a home equity loan, particularly if the value of a home has dropped sharply. This can create a situation of negative equity, which can be very damaging. For those in need of a quick fix however, it is merely natural to want to take advantage of their home investment by getting a home equity loan. However, until values come back up, it may be best to hold off on this type of loan according to the experts.
David Wishart, director of personal loans at Lloyds TSB, said: “In recent months we have seen a significant increase in home improvement personal loan requests.
“For the last decade homeowners have been able to sit back and rely on rising property prices to increase the equity in their home but sadly this is no longer possible.
“If you want to trade up and avoid substantially increasing your mortgage, you’ll need to add value to the house you’re currently in.”
Related reading : Home Equity Loans
