Guide to Homeowner Loans

Guide to Homeowner Loans

 

A Homeowner Loan is a loan secured against your home that can help you unlock the capital tied up in your home.

 

Homeowner loans are popular secured loans where your home is used as security to the lender for the money you borrow. In other words, if you don't pay back the loan, the lender can, in extreme circumstances, sell your house in order to recoup any losses. Homeowner loans are also known as second charge loans or second mortgage loans. A Homeowner Loan is any loan which requires the borrower to provide the lender with some form of security, in the case of the Homeowner Loans the 'security' will be a mortgage over the borrower's home. The amount of money you can borrow using a homeowner loan depends on how much equity is in your house.

 

While the lender benefits from the peace of mind of knowing that the loan is secure, there are many benefits to the consumer of homeowner loans. Firstly, compared with unsecured loans, homeowner loans tend to be faster and easier to arrange. As a homeowner, you can borrow against the value of your home without spending your equity. With a homeowner loan, you can keep your current mortgage, so you don't need to remortgage in order to realise the value of your equity.Moreover, homeowner loans usually have a lower rate of interest than unsecured loans. Interest rates for homeowner loans will depend on the amount of money you want to borrow, the repayment period, proof of income, employment status and your financial circumstances, such as your credit record including any mortgage arrears and CCJs.

 

Homeowner loans can be used for any purpose. You can use the money to consolidate existing debts, pay off overdrafts and credit cards or buy yourself a new car, go on holiday or make home improvements. One of the benefits of a Homeowner loan is that the interest rate will be lower than on a comparable Personal loan. You can borrow much more using loans secured on property, normally up to £75,000 and the interest rates are usually lower than with an unsecured loan because of the lower risk to the lender. With homeowner loans you can also pay over a longer period of time, anything between five years and twenty-five years.