What is a homeowner loan?
Homeowner loans are a borrowing option where your home is used as 'security' or 'collateral' for the debt. This means should you fail to repay the balance, the lender is allowed to repossess your property to get their money back. However, this is usually a last resort.
This option is described using various terms; so you might also know it as 'secured loans' or 'second mortgages.'
Using your home as security lowers the risk for the lender, which may make it possible for you to borrow money even if you have a poor credit history. Additionally, lenders might allow you to borrow larger amounts, extend the repayment term, and offer a lower interest rate.
If you are looking to apply, our committed team is here to help you. We will do all the work for you; all you need to do is talk us through your needs so we can try to find you the right product.
We have over 600 solutions, with both fixed and variable rates available, allowing you to find a product personalised to your plans.
How do homeowner loans work?
As the name suggests, this type of loan is for people who own a home. This is because to qualify, you'll need to use your home as security.
Put simply, it is a second line of borrowing, which runs parallel to your primary mortgage. This means that your existing mortgage terms will not be changed.
It works similarly to other loans, where you pay back a set amount each month, as well as any interest costs. Once the term has finished, your loan will have been repaid in full.
The repayment amount is influenced by the interest rate. This can either be fixed (ensuring consistent monthly payments) or variable (meaning repayments can rise or fall).
To start the process, you will need to make an enquiry to our experts either by using our online form above or by calling our UK based team on 0800 032 4646. We have no phone menus, so you will get straight through to our experts.
Before you apply, remember that your home could be at risk if you don't repay, so always make sure you can afford it.
How much could I get with a homeowner loan?
The amount you can borrow will vary depending on several factors including:
The amount of equity in your home: There must be enough equity in your property to cover the amount of money you wish to borrow.
Your credit rating: Lenders will always consider this before offering you a loan. Using your home as security may help you get a loan even if you have a poor or bad credit score.
Your income: It is essential that you can afford to repay the loan. The last thing anyone wants is for you to lose your home, so it is essential to make sure your monthly repayments are affordable.
We will assess each factor carefully to make sure we find a product that has a comfortable monthly repayment plan for you. Our overall loan options stretch from £20,000 up to £1 million.
Are homeowner loans easy to get?
They can be easier to get than unsecured loans, as the qualifying criteria can be less strict. Therefore, if you have any unusual or complex circumstances you may find it easier to get accepted for a homeowner loan.
The actual application process will vary from lender to lender. Most lenders will want proof that you can afford to repay the loan and that there is enough equity in your home to cover the debt if you are unable to repay. Your credit history will also be taken into account.
You will most likely need to:
- Provide proof of income and discuss your monthly out-goings
- Undergo a property valuation
- Undergo a credit check
Some lenders may have extra steps; however, these are the ones that are usually completed. Our advisors will go through each step with you and make sure you understand the process clearly before proceeding.
In general, homeowner loans take around 4 weeks to complete, however previously we have been able to help some customers get their loans within just 5 working days!
What do homeowner loans cost?
The cost of a homeowner loan will depend on how much you borrow, the length of your term, and the interest rate.
In general…
- The more you borrow, the more you will repay. You will be paying interest on a larger amount of money.
- The longer you borrow over, the more you will repay. You will be paying interest for longer.
- The higher the interest rate, the more you will repay.
In the application process, our team will talk through your needs with you, to understand what is most important to you. They will always try to find a product with as little cost as possible for your specific needs.
Are longer repayment periods better than shorter repayment periods?
It depends on your situation and financial priorities. Borrowing money for a longer period may reduce your monthly repayments, but you are likely to pay more in interest in total.
A shorter repayment period will mean that your monthly payments are likely to be higher, however you will pay less money back in total, as you will be paying interest for a shorter period.
We deal with a wide variety of different lenders, and can provide repayment periods ranging from 3 to 30 years. Therefore, we have solutions for both shorter and longer repayment periods.
What is the difference between a homeowner loan and a personal loan?
The main difference is that a personal loan (unsecured loan) does not require you to provide security against the debt. This means approval will be based on your credit history, your personal financial circumstances and your ability to afford the repayments.
Whilst these factors are also considered with a homeowner loan, lenders may be happier to lend to you in circumstances when you may not get approved for a personal loan.
Personal loans also tend to offer lower loan amounts and shorter repayments periods, as this reduces the risks to the lender.
On the other hand, homeowner loans use your property as security, which means they can repossess your house if you cannot keep up the repayments. This reduces some of the risk to the lender, particularly if there is a lot of equity in the property. Therefore, they may be happy to lend larger amounts over longer terms.
Learn more about the differences in our blog on secured vs unsecured borrowing.
How do I enquire?
We want to make the process of applying as smooth as possible. Here are the main steps involved in our application process.
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Step 1: Submit an enquiry
Fill out our enquiry form online or call us to speak directly to one of our advisors.
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Step 2: Speak to the team
After reviewing your enquiry, one of our experts will call you to discuss your situation.
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Step 3: We'll handle the rest
If we find you a product that fits your needs and you're happy, we'll take care of the rest for you.
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Step 4: Completion
Once all of the paperwork is completed, you will receive your funds.
