Use our UK Finance guide and learn by experience. We outline pitfalls so that you don't have to learn the hard way, as many of us often do.
Loans
Homeowner Loans
Having ownership in a property can allow you access to one of the most affordable methods of personal financing - homeowner loans. By utilising this type of facility, you can borrow fairly large amounts of money which you might have difficulty doing, should you not have ownership in a fixed property.
What is a homeowner loan?
A homeowner loan UK is a secured loan instrument which will enable you to borrow money even if you are facing an adverse credit record situation, have just changed jobs or have at some stage in the past had county court judgements (CCJ's) against you. The reason that you are able to secure a homeowner loan UK, even during times when you may feel your financial integrity may be questioned, is that a homeowner loan is secured against, in most cases, your property. This means that it is possible to apply and be approved for an adverse credit homeowner loan. However, should you fail to make your homeowner loan repayments for a long enough period, you would be faced with the very serious possibility of losing your property, which would be attached and sold by your lender in order to recoup their loss in terms of your homeowner loan or adverse credit homeowner loan agreement. For this reason, homeowner loan providers are not as concerned as you might think they would be about your current financial situation or how you have behaved in the past. They know that losing your property should be a strong enough incentive to ensure that you keep up to date with your homeowner loan repayments. So, when you hear somebody speaking of a ‘secured loan', you must always remember that there exists an inherent risk of losing whatever collateral the loan has been secured against.
Adverse credit homeowner loans.
Of course, if you do have a bad credit record CCJ's or have recently changed jobs, homeowner loan providers won't view you as favourably as everybody else. Although you do still stand a chance of being approved for an adverse credit homeowner loan, you will more than likely find that your APR will be a little higher than the advertised rate. However, the cost of operating an adverse credit homeowner loan should still be considerably more affordable than that of other personal finance options available to you, such as unsecured loans.
The affordability of homeowner loans.
Earlier on mention was made of the fact that a homeowner loan UK is one of the most affordable methods of personal financing. There are several reasons for this, the first being that because nobody wants to lose their home, which invariably is what a homeowner loan is secured against, borrowers making use of this facility are seen as less of a non-payment risk and, as we all know, the lower the risk, the lower the cost. Another reason for the relative affordability of a UK secured homeowner loan is that it is usually employed as a long-term facility. This means that your monthly repayment amount will automatically be reduced (when compared with how much you would have to pay back monthly, in respect of your homeowner loan if it had a shorter term to maturity), and because this is a long-term facility, you will find that interest rates are much more favourable compared to short-term loans.
Having said this, homeowner loans need not necessarily be long-term instruments, with tenures varying from anywhere between three and twenty-five years. The principal amount of a homeowner loan can also range from £3,000 to £75,000. These figures will vary from lender to lender and you are best advised to do as much shopping around as possible before making a final decision as to which homeowner loan UK provider you will enter into an agreement with.
What is equity?
Will you still be able to apply for a UK secured homeowner loan if you don't have 100% ownership in your property? Even if you are still paying off your house (which most people are), you can qualify for a homeowner loan. You do of course need some level of ownership, known as equity, in order for a homeowner loan provider to consider your application, as this equity is what your homeowner loan will be secured against. Equity is the ownership that you build up over time by paying off the mortgage you initially took out to purchase your property.
Other advantages of homeowner loans.
The advantages of affordability and the relative ease with which you can qualify for a homeowner loan have already been discussed. Another benefit of homeowner loans is the versatility they offer you when it comes to using the money you have borrowed. You can basically use your homeowner loan for whatever purpose you desire, be it home improvements, a holiday, debt consolidation, etc..
Evaluate your situation.
Although homeowner loans may be affordable and versatile, there is no point in even considering applying for one if you don't have enough net disposable income at the end of the month. Falling far enough behind on your UK secured homeowner loan repayments can have dire consequences, so make sure that you will be able to afford your monthly commitments in all foreseeable circumstances. Obviously not all situations are predictable, but this is where you need to shop around and ask all the right questions before signing a homeowner loan agreement.
Quiz your homeowner loan provider.
You can't predict whether you are going to lose your job or not (hopefully you won't), so ask your homeowner loan provider if they can offer you some sort of insurance to cover you in the event of becoming unemployed or disabled/deceased. Enquire as to whether or not there is a 'payment holiday' clause in your homeowner loan agreement to allow you to skip a few payments should the need arise, without incurring penalty fees or worse. Make sure there are also no early redemption clauses, which will see you being penalised should you settle your debt early.
Summary.
If you own a property, are responsible when it comes to dealing with your finances and are in a situation where you need to borrow money, a UK secured homeowner loan is more than likely the product you are looking for. The advantages of homeowner Uk loans over other personal loan products are quite numerous, but there are so many homeowner loan providers out there competing for your business that you actually need to do quite a bit of homework in order to establish objective comparisons between them, and this will be key to ensuring that you get the homeowner loan which will best suit your specific needs.
