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Will I Get a Secured Loan?
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Secured loans, Homeowner loans, Home Improvement loans and Debt Consolidation loans are, unsurprisingly, only available to homeowners who can secure the loan against their house. Borrowing money against the value of your home enables you to get access to larger sums of money than are normally available with unsecured loans.
The precise amount you will able to borrow varies widely, but could be anywhere between £3,000 and £500,000. Homeowner loan terms vary in length from 3 to 30 years, but some of the most common are 10, 15 and 25-year terms.
The amount of money actually available with a secured or homeowner loan generally depends on how much positive equity you have in your home. If your home is now worth £250,000 and you only have a mortgage for £200,000, you should be able to borrow £50,000. However, if you have considerable amounts of equity in your home then you may well be better off re-mortgaging rather than taking out a homeowner loan.
Borrowing even with negative equity
Where homeowner loans can be most useful is if you do not have any positive equity in your home. If that is the case, you may still be able to borrow money against the value of your house. Some homeowner loan companies will allow you to apply to borrow up to 125% of your home’s value – effectively allowing borrowers with negative equity a homeowner loan.
Some lenders also specialise in offering bad credit homeowner loans. It is likely that the interest rate you pay on a bad credit homeowner loan will be significantly higher than you would get if you were a good credit risk. The same is normally true for homeowner loans secured on houses with no positive equity. As a secured loan however, a homeowner loan normally offers lower interest rates than an unsecured loan. Click here for more on secured and unsecured loans.
NB: Always remember that you are using your home as security for the loan. Your home will be at risk if you cannot keep up repayments.
Source: http://www.everyinvestor.co.uk/personal-finance/loans/will-i-get-a-secured-loan/e/151-721 |
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