A homeowner Loan is a type of secured loan. This means that you need to put forward some form of collateral on the loan (a valuable asset, which in this case is your home). Homeowner loans allow you the ability to borrow anywhere between £10,000 and £150,000 for up to 35 years. This is a good way to secure large amounts of finance that can be spread out over an extended period of time.
The value of your home plays a large part in the amount of money that you can borrow. It works by taking something called your “home equity” into account. If you are still paying off your mortgage, your home equity is the amount of money that you have put towards paying off your mortgage.
For example, if your home is worth £250,000 and you have paid off £100,000 of that, then your home equity is £100,000. This is the amount of money that will be used to determine how much you can borrow, and how long your repayment terms last.
What are the benefits of a homeowner loan?
Homeowner loans are very popular for three reasons, which are:
- They allow you to borrow a lot of money
Homeowner loans allow you to borrow more money than if you took out any form of unsecured loan. This is useful for people who require funds for making a very large payment, and who wish to pay it off over a longer period of time.
- You can pay off the loan over a very long period of time
Homeowner loans allow the borrower to have a repayment period of up to 35 years. This means, no matter how large the size of the loan, you will always be able to repay it withaffordable instalments. Spreading the loan over a large period of time means you are less likely to run into problems with the instalments and avoid the risks associated with defaulting on the loan payments
- Homeowner loans are available to people with a poor credit score
Even if you have a low credit score because of your credit history, homeowner loans will still be an available option to you. This is because the loan is secured against the value of your property, not your credit score.
However, by law, you are still required to be subject to a credit check when you take out the loan. This may affect how much money you can borrow, the length of the repayment period that is available to you, and the interest rate you will have to pay.
What are the downsides to a homeowner loan?
Homeowner loans can result in you losing your home if you are unable to make the repayments. If you have any dependants, then risking your home in order to gain access to finance is often not the best option to take.
Additionally, homeowner loans can be very expensive. If you are borrowing £100,000 over the course of 30 years, you can expect to be paying twice as much that back in interest.
Finally, homeowner loans are only appropriate for people who need access to large amounts of money. If you are only looking for a smaller loan, then you will have to borrow more than you need, leading you to pay back significantly more than you would in interest.
How can a broker help?
Loan brokers provide you with the best possible terms for your loan. There are many different variables that you can change when you are looking for a loan. They are things like, how much you would like to borrow, how, long you would like to be able to repay the money, the interest rate, your credit score, and so on. In order to compare all of these different offerings, it would take you a very long time.
By choosing to work with a loan broker, all of the hard work is done for you. This means you will be able to find a loan with the right terms, without having to search the internet for hours.
Finally, a broker can make sure that you are able to repay the loan. It is in both your and the loan provider’s best interests that you are able to repay the loan on time and in full. For this reason, the loan broker will conduct a credit check on you, as well as doing an affordability check.
Both of these checks will make sure that you have a reliable income stream, and that your expenditures aren’t too high so that you can set aside some money each month to repay your loan.
Are there any alternatives to a homeowner loan?
Insteadof going for a homeowner loan, you may want to consider an unsecured loan. These loans don’t require you to put any collateral up front in order to be given the loan. So, even if you can’t make the repayments, you aren’t at risk of losing your home.
All unsecured loans are for smaller amounts of money, which means that you won’t end up having to borrow more money than you need. This will save you significant amounts in interest payments.
Loan brokers can also help you find an unsecured loan. This means that you still get the benefits of choosing a loan broker, while findinga loan that is more suited to your needs.
An unsecured loan broker can help you find an unsecured loan that you can afford to pay back, over a reasonable amount of time, for the right amount of money that you need.
Get your next loan with BestUnsecuredLoans
If you are considering taking out an unsecured loan, try BestUnsecuredLoans. We are a loan broker, not a direct lender. This means that we send your application to our panel of lenders. These lenders will review your application and decide whether they would like to provide you with finance.
All you need to do is fill out our application form, and we will perform a credit check and affordability check on you to make sure that you are able to repay any loans you may take out.
Then we show your application to our network of lenders. Once we have gathered all of their offers, we will show them all to you directly. You then get the choice of who you would like to gain finance from. This entire process is completed within minutes and you aren’t obliged to take any of the offers that you are given.
To start your application, click here.
