Equity stripping
Okay kiddo, let me explain "equity stripping" in very simple words.
Imagine you have a big cake. This cake is called "equity" and it represents the value of your house. You have worked really hard to make this cake, and it is very important to you. Now, there are some bad people out there who want to take away your cake. They do this by cutting slices of your cake, without your permission.
They start by offering you a loan, which seems like a good idea because you can use the money for something important like a vacation or a new toy. But there's a catch. They say that you have to put your cake as collateral, which means that if you can't pay back the loan, they get to take away a slice of your cake.
Now, you use the money and forget about it for a while. But soon, you realize that you can't pay back the loan. So, the bad people show up and take away a slice of your cake. This means that your cake is now smaller, and it is worth less than before.
Equity stripping is when someone takes away slices of your cake (equity), without your permission. They do this by offering you a loan that you can't pay back, and then taking away a part of your cake as punishment. So, you end up losing the value of your house, just because you were not aware of the risks of taking a loan.
It's important to be careful and always read the fine print before signing any loan agreements. And remember, your cake (equity) is very important, so you should always protect it!
Imagine you have a big cake. This cake is called "equity" and it represents the value of your house. You have worked really hard to make this cake, and it is very important to you. Now, there are some bad people out there who want to take away your cake. They do this by cutting slices of your cake, without your permission.
They start by offering you a loan, which seems like a good idea because you can use the money for something important like a vacation or a new toy. But there's a catch. They say that you have to put your cake as collateral, which means that if you can't pay back the loan, they get to take away a slice of your cake.
Now, you use the money and forget about it for a while. But soon, you realize that you can't pay back the loan. So, the bad people show up and take away a slice of your cake. This means that your cake is now smaller, and it is worth less than before.
Equity stripping is when someone takes away slices of your cake (equity), without your permission. They do this by offering you a loan that you can't pay back, and then taking away a part of your cake as punishment. So, you end up losing the value of your house, just because you were not aware of the risks of taking a loan.
It's important to be careful and always read the fine print before signing any loan agreements. And remember, your cake (equity) is very important, so you should always protect it!