Aside from the personal tax benefits for interest on tuition costs, home equity loans can offer significant tax benefits to small business if they are used for business purposes. Even though the loan may be borrowed in your personal name, if the whole amount is re-loaned by you to the business and the business uses those funds for business purposes, then the net interest paid on the home equity loans can be tax deductible. We recommend that you discuss this with your tax advisor to take account of individual circumstances.

Compare Rates Between Home Equity Loans And Line Of Credit 

In this exercise you are not comparing apples with apples as one facility has a fixed amount of interest to repay at the start, whereas the other is an open ended position.  It is quite difficult to directly compare interest rates between what are quite different products even though they are both based on your home’s equity level.

You can only compare like products accurately, however you can compare what you may pay back assuming you don’t redraw. So the method you would use is to plan out how you expect to use a line of credit facility. You will need a spread sheet with a present value calculation, but if you include an estimate of your balance at every monthly period you will then see the effect.

The difference is the effect of paying a higher rate but having a lower balance earlier in the loan term, because you can apply funds to the account on a temporary basis. With a fixed term fixed rate facility you only pay the monthly instalment. However with a line of credit facility you can delay paying another expense (one that’s not interest rate affected) for a period and get the effect of that reduction in interest cost.
A key difference would be if you have the ability to have you wages paid into this facility as you probably always keep a small residual in hand that would be reducing your interest costs overall.

Why Choose a particular Home Equity Loan Lender?
Home equity loan rates can vary significantly between lenders and their interest rates may be different for their own fixed term facilities and for their line of credit style products. It's wise to compare home equity loan rates Read more...