What is a Package Loan?

A package loan is designed to cover the cost of not only purchasing a home, but also gaining personal property in the home. This is commonly required with a model home that is lacking most furnishings including carpeting, flooring and window treatments. You can use a package loan to help bear the cost of some move-in expenses. 

Package Loan vs. Home Equity Loan

When you purchase real estate, you may be contacted by a home equity lender to take a separate loan from your mortgage. The home equity loan is secured against your property and provides liquidity for daily purchases and improvements to the property. The function of a home equity loan and a package loan is essentially the same, but there are some key differences:

  • A package loan is sourced in place of a traditional mortgage loan and requires only one application for both
  • A package loan provides for one monthly loan payment to the mortgage and the personal loan combined
  • A home equity loan is typically a revolving credit line, like a credit card, that provides slightly more flexibility than an installment loan
  • A home equity loan typically lasts longer and may even remain in place until the borrower closes the credit line yourself