equity-loan

Vocabulary Word

Definition

An 'equity loan' is when you borrow money and use something valuable you own, often your home, as collateral. This means if you can't repay the loan, the bank may take your home.

Examples in Different Contexts

In real estate investment, an 'equity loan' can be used to finance the purchase of additional properties. A real estate investor might say, 'I'm taking out an equity loan on my current properties to fund the down payment on a new investment property.'

Practice Scenarios

Finance

Scenario:

Managing multiple loan repayments can be challenging. Consolidation could streamline your finances and lower your interest rates.

Response:

Debt consolidation does make sense for me at this stage. Is an equity loan a suitable option for my situation?

Banking

Scenario:

You mentioned wanting to make a large purchase but are concerned about draining your savings. We might have an option that could be beneficial.

Response:

That sounds interesting. Could you please elaborate more on how an equity loan might help me?