Homeowner Loans

Homeowner Loans

Homeowner Loans for uk borrowers
Homeowner Loans

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UK Finances and Loans » Homeowner Loans

Homeowner Loans

Homeowner Loans are basically Secured Loans which are lent to you using your house as a guarantee. The maximum amount you can borrow depends on the equity in your home (the difference between the market value of your house and any outstanding motgage you may have on it). You must remember that if you use your home as security for a loan, it is at risk if you do not keep up repayments of loans secured upon it.

Homeowner loan is a type of secured loan which helps the borrower to raise additional finance by using his property as security. These loans help free the equity in a property. The equity in a property is the difference between the market value of the property as determined by the lender and the borrower's current mortgage balance. This means, homeowners who have paid off a substantial part of their mortgages would have more equity and hence more money available as secured home loan. The equity built up in the property is used as collateral against the loan amount in case of the borrower's inability to repay the loan within the agreed term. The equity amount is used by the lender to determine the loan amount he can offer, calculate the APR (Annual Percentage Rate) and decide on the term of loan.

The lender feels less at risk and hence can offer a higher loan amount to suit the borrower's needs. Usually, lower rates of interest are applicable on these types of loans. The borrower may choose to use the loan amount for debt consolidation, home improvement, buy a car, additional funding for his business or for higher education. Lenders and finance companies can stretch the repayment tenure to 25 years and the loan amount up to 100% LTV (loan to value - a ratio between the amount of loan and lender's valuation of the property).

Although, credit ratings of the borrower are taken into consideration during the loan approval, a bad-credit score does not necessarily deny him access to home-owner loans. However, in these cases the interest rates charged by the lender could be comparatively higher.

On the downside, if the borrower's record shows a trend of consistent non-remittal, his property could be taken over by lender. Experts advise legal scrutiny before entering into loan agreements for amounts greater than £25,000 as such amounts are unregulated by Consumer Credit Act 2006.

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UK Finances and Loans does not represent any particular loans or finance company. When requesting a loan from any of the online loans or finance companies listed you are dealing directly with the loans or finance company. We are not responsible for the transaction or any problems with applications or loans arranged through any of the online loans or finance companies listed on this site.

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