Home equity loans are often an overlooked choice when it comes to obtaining financing for major purchases or paying down existing debt. But there are several advantages to taking out a home equity loan, namely the longer repayment terms it offers compared to other types of consumer lending. Understanding the benefits of longer loan terms can help you determine if a home equity loan is the right product for your financial situation.

One of the primary benefits of opting for a home equity loan is the option to choose extended loan terms over the shorter ones more common with other loan products. With a home equity loan, you might have the option to stretch out a loan repayment up to 15 years. Longer terms can significantly reduce your monthly payments, meaning more money stays in your pocket each month.

For instance, say you needed to borrow $20,000 to pay for medical bills or home improvements. With a five-year personal loan, you might have an interest rate of 7.50% and a monthly payment of $384.75. By opting for a 10-year home equity loan, your monthly payment could drop to $230.79. By taking the home equity loan, you pocket $153.96 each month, or $13,535.