Homeowner Loans

A homeowner loan is for people who have their own home with a mortgage. The loan is secured against your home. Because your home is used as security for repayment, homeowner loans are often called secured loans.

Advantages

A homeowner loan allows you to borrow an amount based on the equity in your home. This type of loan is often easier to obtain than a regular mortgage. The loan process is often much faster. Because the loan is secured against your home, interest rates and terms are better than unsecured loans. You may also be able to borrow more money than with a personal loan. Personal loans are usually for up to £25,000, while homeowner or secured loans can be for larger amounts. Having the security of your home’s value, lenders rely on more than just personal credit history to assess any repayment concerns. People who are self-employed or have a bad credit history can still be considered for a homeowner loan. Most home loans can be repaid over a longer term than an unsecured loan. As well, you have the option of paying it off early if you are in a good financial position.

Disadvantages

Because homeowner loans are relatively easy to obtain, it can be tempting to overspend with the money you borrow. Remember, this is not free money and you are literally borrowing from the value of your home. If you default on your repayment, you could lose your home. So, think very seriously before taking out a homeowner loan.

Lending Amount

Your lender will work with you to determine the maximum amount you can borrow through a home loan. They will consider factors such as the value of your home, the amount of your current mortgage, and other debts. They will use this information to put together a loan package for your consideration. Most lenders will lend you a percentage of the value of your house, with some even going as high as 125% of your home’s value.

Where Can I Find A Homeowner Loan?

There are a number of lenders offering homeowner loans. Check with your existing mortgage holder, as lenders often have preferred rates and terms for existing customers. The loan process may also go more quickly, as they already are familiar with your patterns of repayment. Even if your current lender has a great offer, it’s a good idea to check out other lender offers.

Considerations

A homeowner loan will allow you to borrow money against your house. This allows you to get a quick decision or borrow a larger amount. If the secured or homeowner loan is to consolidate existing debt, make the necessary plans to ensure that existing debts are controlled to prevent a similar situation from happening. Think carefully before securing other debts against your home. If you fail to make your payments, your home could be repossessed. Talk to a financial advisor before making a decision.