What is a home equity loan?
Before delving into the nitty-gritties of the HSBC home equity loan, it is essential for customers to have a thorough understanding of what home equity loans are. Equity refers to value and home equity loan is nothing but a loan taken against the equity of the customer’s home, or in other words is where the loan is backed by the customer’s home as a collateral. The lump sum amount procured through this loan can be used for a variety of purposes such as tuition fee, large scale home repairs and such.
Equity is usually calculated as the difference between the appraised value of the house and the amount of mortgage left to pay for it. For example, if the appraised value of the house is P160,000 and if the balance left to be paid for the mortgage is P120,000 then the equity of that particular house is P40,000.
Customers should note that the equity value is subject to change based on the appraised value of the house. If customers have made renovations or improved the quality of their home, or if the neighborhood improves due to a new school or restaurant of repute then the value of the person’s home generally improves due to the increased value of the real estate. In such cases the equity of the home increases and this amount can be calculated using the same method given above.
Home equity loans as mentioned before, are usually issued against the customer’s home as collateral. Therefore if a customer defaults on his/her payments then the bank or financial institution that provides the loan has the right to sell or auction the house in order to collect the remaining loan amount. Since this is a secured loan, i.e, a loan issued against a collateral, the interest rates are usually fixed and not very high. These interest rates are based on the amount procured by the customer as loan and other factors such as the loan repayment capacity of the customer, credit scores, etc. Most banks and lenders issue loans to customers who have a stellar credit record. The interest rate decided by banks is also dependent on this. Banks and lenders provide low interest rates to those who are deemed constitute low risk by banks in terms of loan repayment and such customers may also be able to negotiate with these lenders on reducing the interest rate and for a flexible repayment tenure.
Such loans are best utilized for certain specific reasons such as tuition fee which can be paid off relatively quickly. Customers need to ensure that, while availing such a loan they must have a good credit score with good debt repayment capacity as is the case while procuring other loans as well.
Also read : Home equity loan in Philippines
HSBC Home Equity Loan in the Philippines
HSBC provides a number of loans to customers within the Philippines with home equity loans being one of the popular choices availed by customers. HSBC or The Hong Kong and Shanghai Banking Corporation was established in 1866 in Hong Kong. In 1989, it was renamed as The HongKong and Shanghai Banking Corporation Limited and is the founding member of the HSBC Group of Banks and Companies. HSBC is the largest bank within Hong Kong and has offices in various countries in the Asia Pacific region and around the world. As part of its banking portfolio, HSBC offers various services in corporate, commercial and financial banking among others. It is a public limited company and was founded by Sir Thomas Sutherland.
Amongst its various offerings to the citizens of Philippines, home equity loans are one of the popular choices.
Benefits and features of the HSBC Home Equity Loan
This loan enables customers to use their home as a collateral to obtain finances for myriad purposes such as home renovation projects, investment deals and others. Through this loan, customers can turn the equity on their home into cash. This loan by The HSBC is one of the more popular loans due to the following features.
For any loan to be feasible, the rate of interest charged on it and the loan repayment tenure must be economical and flexible respectively. Customers prefer to go for options that allow them convenient interest rates along with other added benefits and features. The hassle of extensive documentation is also something that most prefer to avoid. The HSBC home equity loan is highly convenient and can be repaid back quite easily as well. HSBC offers loans at rates of interest that are as economical as 4.99% per annum for a one year repricing and 6.49% per year which is fixed for first five years. In addition to this, customers can also procure the option of having their loan fee waived.
The important features and benefits of this loan by The Hong Kong and Shanghai Banking Corporation are provided below -
- Customers procuring this loan have the option of availing repayment schemes that are very flexible. By opting for the ‘Straight-Line Scheme’, customers can predict their expenses quite easily. Another option that customers can opt for is the ‘Reducing Balance Scheme’ and thereby save on interest settlements.
- As mentioned previously, flexible interest rates are one of the most sought after features chosen by customers. Individuals have the option of choosing interest rate repricing options of 1-5 years.
- Customers can also enjoy the benefit of repaying their loan in a currency convenient to them. They can choose to pay their loans in Hong Kong Dollars, US Dollars or Philippine Peso.
- A high quantum of loan amount is also provided. Users can avail loan amounts between P700,000 to P50,000,000 or the equivalent in foreign currency. Users can calculate their mortgage by using the calculator provided on the website.
- Customers do not have to go through the hassle of extensive documentation and long waiting periods to get their home equity loans processed. Customers can seek appointments with HSBC’s home loan experts and avail swift feedback and quick loan processing.
- Users will also enjoy the advantage of personalised services so as to procure the most convenient deal.
- Loans are provided quickly and a lot easily to customers who have a good credit record and debt repayment history as these customers are categorized as low risk in terms of repaying their loan. Hence, before procuring home equity loans, customers must ensure that their credit records and scores are top-notch and thereby procure home equity loans at competitive interest rates.
- Although opting for long repayment tenures seems like a convenient option, customers are advised to go for a short repayment term. This is because, if customers opt for a long tenure then the total amount of interest they will have to pay will be quite high as opposed to the amount being paid if the tenure is short.
- Home equity loans are a very convenient option for those who require a high loan amount. Customer should ensure that they repay their loans on time as defaulting on payments may result in their losing their homes.
- The HSBC home equity loan comes with a wide variety of benefits and features that makes this loan very convenient and one of the most sought after loans in the Philippines.
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