Homeowner Loans are a type of secured loan, for homeowners to use their property in order to borrow money. The borrower’s property acts as the collateral against which the loan is secured.
How Does a Homeowner Loan Work?
The amount that a homeowner is allowed to borrow when getting a Homeowner Loan depends upon the value of their property; a percentage of the property’s worth is given in the form of a loan. This ensures that, should the borrower be unable to repay their Homeowner Loan, the lender will retrieve their money owed (plus interest) when repossessing the home used as collateral.
For the loan amount to be calculated and approved, a home valuation must first take place in order to verify the worth of your property. The valuation is fairly and expertly performed, usually by a surveyor, and will determine your loan amount in accordance with the percentage of the property value that you are borrowing.
Repay your debts
Borrow even with a poor credit rating
Competitive interest rates
Borrow up to £5 million on your home with Secured Loans
If you do not have a brilliant credit rating, a secured loan is an option for you. Your home acts as the security upon which the loan is based, such that the lender is able to retrieve money owed through your home if repayments are not made. Unsecured loans are usually given exclusively to applicants with very good credit ratings. This is because the loan is not secured against an asset which can act as a safeguard should a borrower be unable to make repayments.
Understanding Home Equity
Equity in your home, quite simply, is the difference between the value of your property and the amount of outstanding money you have borrowed against it (usually in the form of a mortgage).
If the price of your home cost £300,000 and you borrowed £100,000 against it, then the equity in your home is £200,000. This is the portion of your home that you own outright, as you have no loan against it. The equity in your home will rise if the value of your property rises and as you begin to pay off your mortgage.
How Does Equity Affect My Homeowner Loan?
In most cases, the larger the amount of equity you have in your home, the better deal you get when applying for a Homeowner Loan. The reason for this is that, if you were to default on your loan, a lender will have a source of money from which to retrieve it.
If home repossession were to occur, the first lender to be paid will be the mortgage provider, followed by the Homeowner Loan provider. Repossession is a worst-case scenario and only occurs in cases where someone is rendered unable to repay their loan.
You may be eligible for a Secured Homeowner Loan if you:
are over 18 years old
are a homeowner
have a steady income – are able to make monthly payments
If you need to borrow a large amount of money, then a Homeowner Loan may be the option for you. As with most secured loans, Homeowner Loans enable you to borrow more because the loan is safeguarded against the value of your home. Secured loans also allow for a longer repayment time than smaller, unsecured personal loans.
Interest rates on secured loans tend to be lower than on unsecured loans, making the former more appealing if you are concerned about paying large amounts of interest on a loan.
Contact us for more information on Homeowner Loans and how they can help you.
Your home may be repossessed if you fail to keep up with your repayments.