The best way to obtain a low rate loan is to go for a secured loan. A secured loan is given against a property. The rates of interest on secured loans are much lower than the rates on unsecured loans. If you are a homeowner, you can put up your house as a security to get a secured loan. Such a loan is known as a homeowner’s loan. If your house is already mortgaged, you can apply for a home equity loan. For instance, if your unpaid mortgage balance is, say 80% of the value of your house, you can apply for a home equity loan on the remaining 20% of the value of your house. This value, which is not covered by the mortgage amount, is known as home equity.A home equity loan can be used for any purpose. Since it is a low rate secured loan, it can be very useful in consolidating your debt. The basic purpose of a debt consolidation loan is to replace your high rate loans into a single low rate loan. Therefore, a home equity loan is ideal for debt consolidation.A home equity loan can be used as a business loan. Because of a high rate of failure of new businesses, lenders are reluctant to offer business loans. Since a home equity loan is a secured loan, it reduces the risk for lenders and they easily offer such a loan for business purpose. Home equity loans are also a convenient way of obtaining bad credit loans. If you have a poor credit score, a home equity loan can help you avoid a high rate of interest.A home equity line of credit is a type of home equity loan. In case of a home equity line of credit, the borrower is allowed to borrow money against his house up to a certain limit. The borrower does not have to pay interest on the entire amount. He has the freedom to use a part of the entire loan amount and pay the interest on only that much amount which he has used.