Collateral is a property or other asset that a borrower offers as a way for a lender to secure the loan. … If the borrower stops making loan payments, the lender can take hold of the items or house designated as collateral, to recover its losses on their loan.
Subsequently, can I borrow money using my house as collateral?
Don’t let anyone talk you into using your home as collateral to borrow money you may not be able to pay back. High interest rates and credit costs can make it very expensive to borrow money, even if you use your home as collateral. Not all loans or lenders (known as “creditors”) are created equal.
Consequently, can I use my house as collateral for another house?
Yes, you can use your equity from one property to purchase another property, and there are many benefits to doing so. Home equity is a low-cost, convenient way to fund investment home purchases.