A homeowner loan is one that is secured against your home or property and generally lenders are more willing to lend to home owners because of the house being used as security. Homeowner loans have a very low rate to get loans equal to the value of your home and this will be used to determine how much the lenders are willing to give you. Some will only offer you 85% of the “loan to value” ratio of your home (LTV) whilst other can offer you up to 125%.
Because your home will increase in value over time this makes it the ideal asset for securing a loan and because of this a homeowner loan is a lot easier to obtain than a normal secured loan where anything can be offered up as security- ultimately, houses are where the top value is.
The bulk of homeowner loans can be between £500 and £100,000 but some can even offer up to £250,000 if they value your house high enough. Your credit history will feature heavily in deciding what APR you receive and your over all loan will be based on the APR and the amount you can borrow. Your credit will be scored on your recent activity and the lender will decide whether you fit into the category of Excellent, Good or Adverse credit to determine whether or not you can have a loan.
Like many loans, a homeowner loan can be used for a whole host of reason. To put multiple debts into one place to make payments easier, to pay for home improvements or extensions, for buying a new car and even for helping finance your child’s university fees and living costs. Because the loan is against your house you need to ensure you pay the repayments on time and that they are easily manageable for you to easily repay on time without you having to panic or run into financial trouble- remember to take interest and payments for extras into consideration when planning your budget and check the rate is right for you. Rates can be between 5% and 30% and finding a good deal can be a little overwhelming- but shop around to find the best policy. Lots of comparison sites are here to help you, and researching you loan properly will ensure that it’s right for you and there’s no risk to you and your home.
