How Homeowner Loans Work
If you want a larger amount for your loan, your best bet is a homeowner loan. The loan is also known as a secured personal loan meaning it is secured against an asset, in this case your home. Lenders and banks especially are keen on approving such loans because the risks are lower and they can always repossess the collateral in case the borrower defaults or fails to make repayments.
While homeowner loans are secured, easy to avail and comes with lower interest rates, it's still just as important to know how it really works. You can start by reading useful guidelines about secured personal loans at http://www.moneysupermarket.com/c/secured-loans/.
Moving on, to be eligible for a homeowner loan, you need to be of legal age, a resident of UK and obviously, a homeowner with substantial equity. Depending on your income, credit rating and the value of your home, you can borrow between £10,000 and £250,000 at terms ranging from 3 years up to 25 years.
Representative APRs for top lenders in UK typically falls at around 5% to 8% which means rates are definitely lower compared with other types of financial products. Though there are still additional charges and fees, your monthly repayment will still come out cheaper hence more manageable in the long run.
Though there are certainly a number of advantages with homeowner loans, it's not without its disadvantages. For people with bad credit, for instance, rates may be higher and loan amount smaller. If you property's equity is smaller and you are tied with other financing, you'll also end up borrowing just a fraction of what the lenders offer. But more importantly, the greatest risk is with regards to repossession of the asset. Missing several repayments are bound to result to sever consequences.
Since the loan is secured against your home, the lender will eventually seize the asset leaving you with bad credit and without a home.