How does a home equity loan work?

Home equity is the difference between what your home is worth and what you owe on your home loan. A lot of people may be unaware of how a home loan works when it comes to equity.

Basically, your equity increases if the value of the property does. If you owe R1 000 000 on your bond and the property is worth R1 200 000, you have equity of R200 000.

You can apply for a home equity loan in the same way you apply for a home loan. The higher your credit score, the higher your chance of approval and the lower your interest rates on the home equity loan.