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Homeowner Loans

As the term suggests, homeowner loans are loans secured against your home, which serves as collateral. You may be able to borrow up to £100,000, depending on the amount of equity that has built up on your home.  You will have to make monthly repayments throughout the duration of the loan, which typically lasts between one and 25 years.

A homeowner loan is ideal for individuals who are looking to borrow a much larger amount than a traditional personal loan, which you can use for large expenses such as buying a new car, consolidating your debts, or for home improvement.

Homeowner loans are also suited for borrowers with bad credit and who couldn’t otherwise secure a standard, especially a large personal loan. Because of the presence of collateral, the lender’s risk is reduced, making acceptance for bad credit clients more possible.

Secured loans such as a homeowner loan can also help reduce the interest rates of the loan. This is also because of the typically huge value contained in one’s property that limits any potential risk on the lender’s part.

Homeowner Loan Considerations

It is important to remember that homeowner loans can have variable interest rates, which means the APR can go up and down, and can make budgeting your finances really challenging.

Because of the typically large lump sum associated with this type of loan, the repayment terms are also longer than unsecured loans, and can last up to several years. This means you need to be able to watch your budget closely and sustain your repayments for that length of time.

If you took out a homeowner loan to consolidate your debts, this would most likely mean lowering your monthly payments to a rate you can afford. While this can reduce strain on your finances, keep in mind that this would extend the amount of time that you will have to repay your debts, and will mean more payments over the long haul.

Always remember to take caution when applying for secured loans, especially one that is tied to your home. Always be prepared for future financial challenges as falling behind on your payments can leave you homeless.