Picture your Future. Save for it by earning 1.5% on a 1-year Term Deposit Account! Learn more.

The pros and cons of a home equity loan

Home Equity is the value of the property that you own. Put more simply, your home equity is the difference between the market value of your home and the outstanding balance on your mortgage. A home equity loan allows you to borrow money against the value of your home.

There are several advantages associated with taking out a home equity loan. The most obvious of these is the fact that you can generate significant cash flow, depending on how much equity you have in your property. You can use this to fund a significant purchase such as a boat or a car, pay for home improvements or an event like a wedding.

A home equity loan also offers the additional advantage of offering interest rates which are lower than those which can be found for a standard personal loan. This is because it is secured by your home. The duration of a home equity loan is also likely to be longer than that of a personal loan, making your monthly repayments even more manageable.

On the downside, you do need to keep in mind that a home equity loan is secured by your property. This means that if, for some reason, you are no longer able to make your payments you run the risk of losing your home. Furthermore, when you take out a home equity loan, this inevitably reduces the equity you have in your home. Should the property market stagnate or decline, there is a possibility that the value of your home ends up being less that the total amount of your loans. This could then have an impact on your ability to sell the property.

When considering a home equity loan, it is important to note that these types of loans are designed primarily to cover significant expenses over the long term. If you need to cover more mundane expenses in the short term, other option might be more appropriate. Also, while the opportunity to access large amounts of money can be very tempting, make sure that you are comfortable with the additional monthly repayments you will have to make over a number of years.

A home equity loan can be a useful way to access cash for various purposes, but it also comes with some risks and costs. You should weigh the pros and cons carefully before deciding to apply for one. If you would like more information, visit the Home Equity Loan page on our website, where you will also find ways to contact us for additional advice from our home loans experts.

MeDirect Bank (Malta) plc, company registration number C34125, is licensed by the Malta Financial Services Authority as a Credit Institution under the Banking Act 1994. Applications are subject to the Bank’s lending criteria. Terms and conditions apply and are available on request.

Join MeDirect today to access the tools you need to put your money to work on your own terms.

Latest news articles

Zeroing in on secular forces, not cycles
All News

BlackRock Commentary: Zeroing in on secular forces, not cycles

At BlackRock’s 2025 Outlook Forum, investment leaders analyzed how to navigate major structural shifts—like U.S. policy uncertainty, AI, and global geopolitics—by updating feasible investment scenarios in response to today’s diverse, high-stakes possibilities.

Epic Investment Partners Weekly Article
All News

Epic Investment Partners Views: The Week Ahead

This week’s market focus includes global inflation data, the COP 29 climate conference, and major earnings reports from Chinese e-commerce giants, along with key US CPI, Eurozone GDP, and UK employment figures, as central banks weigh in on monetary policy and China’s recent measures to support domestic growth gain attention.

Experience better Banking

The sooner you start managing your money, your way, using the best-in-class tools, the sooner you’ll see results. 


Sign up and open your account for free, within minutes.

MeDirect_Multi-Devices-cards

You are leaving medirect.com.mt

Please be aware that the external site policies, or those of another MeDirect website, may differ from this website’s terms and conditions and privacy policy. The next website will open in a new browser window or tab.

 

Note: MeDirect is not responsible for any content on third party sites, nor does a link suggest endorsement of those sites and/or their content.

Login

We strive to ensure a streamlined account opening process, via a structured and clear set of requirements and personalised assistance during the initial communication stages. If you are interested in opening a corporate account with MeDirect, please complete an Account Opening Information Questionnaire and send it to corporate@medirect.com.mt.

For a comprehensive list of documentation required to open a corporate account please contact us by email at corporate@medirect.com.mt or by phone on (+356) 2557 4444.