The second charge on your residential property is the reality in the UK. Amid escalating cost of interest rate and strict banking restrictions post Brexit along with constant wages and minimal growth opportunities for many with a non technical background, using secured homeowner loans is one of the most convenient ways to raise a loan.
Unlike bad credit loans, there are fewer hassles involved with homeowner loans and you get swifter access to funds at a cheaper rate of interest. A lot of loan partners offer instant homeowner loans online; however, you should complete your homework and browse a little before applying for one.
Here is a list of Frequently Asked Questions (FAQs) by borrowers:
What exactly are homeowner loans?
As the name suggests, homeowner loans are meant for homeowners. Despite their current mortgage, homeowners can raise a second charge on their residential property against the balance equity they own. It is a secured instalment loan which is extended despite poor credit or past credit hassles. The rate, amount and duration of loan depend on your overall profile. You need not stick to your mortgage lender for a new loan on your home as it works completely independent of the previous loans.
For what purpose can I borrow homeowner loan?
There is no restriction on the use of homeowner loan. Right from your personal, social or household expenses, to home improvement to debt consolidation, you can use these funds for any purpose. Like personal loans, these are all-purpose loans.
How does a homeowner loan work?
They work in the same manner as any other secured instalment loan. You get a loan at a fixed or variable interest rate that is predefined in the loan agreement. The eligibility for homeowner loan is dependent on how much equity you own. Generally, you can borrow 70 percent LTV of home equity. However, with bad credit, it is important to borrow the required amount only. You should use small homeowner loans for urgent use only.
Is homeowner loan bad for my credit rating?
When you have a bad credit history, an additional loan is bound to raise a red flag on your credit report. However, it would be incorrect to say that homeowner loans hurt your score. As long as you have high debt to income ratio your score would stay at the lower level. You must instead focus on availing an affordable instalment loan and ensure timely repayments. By successfully repaying your loan you can improve your score gradually.
Can I borrow an unsecured homeowner loan?
Technically homeowner loans are extended against home equity and main street lenders would not help you avail an unsecured homeowner loan. However, if you do not want to use home equity for a loan, you may consider contacting a loan broker and get introduced to unsecured loans available for homeowner borrowers. Many private lenders rate homeowners’ credit rating more than tenants and offer better deals. The unsecured loan, however, would be more expensive than a secured loan.
I am self-employed can I get homeowner loan?
Whether you are self-employed, part-time employed or full time employed, you can borrow a secured loan with the least hassles. Make sure you contact an FCA authorised broker for the purpose. They will help you establish your credit ability with more ease.
What if I fail to repay my homeowner loan?
Being a secured loan, when you fail to repay a loan, the lender can challenge you in the court to sell the asset to compensate for the default. You should thus always have a repayment plan in place before applying for homeowner loan.
Hope these FAQs would help you make a smart decision. If you have more queries, you can feel free to ask us.