An excellent source for revolving funds are home equity lines of credit. With these financial products you can obtain all the funds you need at a competitive rate without worrying whether you can afford fixed monthly payments. Besides, just like home equity loans, home equity lines of credit have many benefits over personal unsecured loans that turn them into a much better option.

In order to decide whether home equity lines of credit are the right financial product for you, you need to understand how they work. But first, you should also be familiar with personal unsecured loans and home equity loans so you can knowingly compare what each of these products have to offer.

Personal Unsecured Loans

Personal unsecured loans are not easy to qualify for, they require a good credit history mainly due to their unsecured nature. The only guarantee of repayment that the lender has is your credit worthiness. There are however, some lenders that might approve you for an unsecured personal loan even with bad credit or no credit at all.

Nevertheless, if approved for an unsecured personal loan, the interest rate will depend on your credit score. Unsecured loans carry higher interest rates than secured loans and if your credit score is less than perfect, then you will have to face even higher rates making these loans a really expensive financial product.

Personal Unsecured Loan Amounts

For the same reasons, personal unsecured loans offer only small loan amounts. The risk involved in these transactions makes the lenders try to endanger the least amount of money possible. Thus, these loans come only in small amounts that rarely exceed amounts of $10,000 or $20,000.

Moreover, when loan amounts are that high, the interest rate charged tends to be even higher. Besides, the loan repayment program is limited which implies you will have to repay the loan in short periods of time. Unfortunately, this means that the amount of the monthly payments will be high enough to put in jeopardy the loan affordability.

Home Equity Loans & Lines Of Credit

Home equity loans on the other hand, carry lower interest rates due to their unsecured nature. Given that home equity lines of credit share this nature, they also carry lower rates. However, the interest rate charged by lines of credit is slightly higher than that of home equity loans and the rate is also variable while on home equity loans it can be either fixed or variable.

The amount you can obtain from home equity loans and lines of credit is significantly higher. You can request any loan amount up to the remaining equity on your home though, unless you have perfect credit you will not be able to obtain 100% financing on your equity’s value. As a plus, home equity lines of credit offer revolving funds. Thus, if you repay a portion of the money you requested you can withdraw it again whenever you need it. That’s why Home equity lines of credit are a perfect solution for those seeking flexibility and cheap financing at the same time.


Melissa Kellett is an expert loan consultant who has worked for twenty years in the financial industry and helps people to repair their credit and get approved for home loans, unsecured personal loans, student loans, consolidation loans, car loans and many other types of loans and financial products. If you want to learn more about Personal Loans for Bad Credit People and Personal Loans you can visit her site http://www.speedybadcreditloans.com/