| A homeowner loan can be a
useful source of additional finance for homeowners; the benefit
of being a homeowner can be seen in the little restriction
placed on the borrower with regard to how the loan money can
be used, and how much money the borrower is entitled to. These
benefits arise because the borrowed finance is secured by
the borrower’s home or property, regardless of whether
it is owned outright, or still requires mortgage payments.
A loan that is secured against a property that is already
mortgaged is known as a second charge, whereas a loan that
is secured against a property with no existing mortgage (owned
outright by the borrower) in place is known as a first charge.
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Secured homeowner loans are available in
varying amounts, and may be used for many different purposes.
Because the lender has secured the borrower’s home as
collateral, they are more willing to offer flexibility with
the issued finance. Obviously the terms and conditions of
each loan vary between lenders. As with any type of borrowed
finance, an interest charge will be added to your monthly
repayments. The amount of money that you can borrow, the term
available and the interest rate will all depend upon how much
equity you have in the secured property, the lender's view
of your ability to repay the loan and your personal circumstances.
Normally, the interest rates available for secured loans are
lower than for unsecured finance, because collateral has been
secured by the lender in the form of the borrower’s
home. For this reason many people also find secured finance
easier to obtain than unsecured finance, even if they suffer
from a poor credit history.
The Consumer Credit Act (1974) is a method
of protection for borrowers. Secured finance to a value of
£25,000 is covered by the act; values above this are
unregulated. Many lenders offer insurance policies with their
loans which protect you from the possibility of not being
able to make repayments due to unemployment or illness. If
you do find difficulty making your repayments, whatever the
reason, you should immediately seek advice from your lender.
Applications for homeowner loans (which can
usually be made in person, over the telephone or online) are
usually dealt with quickly and efficiently; you should be
aware however of the statutory 7 day “consideration
period” which must take place before finalisation of
an agreement. This is to ensure that the borrower is fully
aware of the possible implications of failing to make repayments.
If you are currently searching for a competitive
homeowner loan, why not drop us a visit? Our website provides
an extensive directory of the UK’s most reputable homeowner
loan providers who will easily be able to provide you with
the deal that you are looking for.
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