Homeowner Loans Often Called Secured Loans Are The Loan Of Preference For Homeowners.
Two forms of loans are unsecured and secured.
Unsecured loans, as the names makes more than clear, require no form of security whatsoever , and as such are available to both those who do not own their own property, that is , tenants, and also to homeowners.
Even at the best of times that is pre credit crunch unsecured loans were difficult for tenants to obtain, as being completely unsecured, the lender was taking a risk that he could lose the money advanced in the case of the tenant defaulting.
For homeowners unsecured loans were slightly easier to obtain, although the maximum loan was normally restricted to around 15,000 which is often not an adequate amount if the loan is required to fund a major purchase such as a motor home, or to pay for subtantial home improvemnts such as a conservatory, an extension, a swimming pool and so on.
Tenants have no option but the unsecured loan but for homeowners the situation is very dufferent as they also have the choice of homeowner loans.
Homeowner loans are only availabe to homeowners and they are an excellent way to fund almost anything. Homeowner loans are also called secured loans as they are secured on the equity of the property.
Unlike before the recession, homeowners cannot obtain a secured homeowner loan if there is no equity on the property.Equity is the difference between the value of the property and the balance left on the mortgage.
To give an example of the above, if a property is worth 200,000 and the mortgage is 190,000 the equity is in fact 10,000. Equity margins have been restricted nowadays and secured loans are only available at a maximum of 80% and 70% for employed and self employed borrowers respectively.
If a property is worth 300,000 and the mortgage balance is 200,000, the maximum available homeowner loan would be 40,000 if the applicant is employed and 10,000 for a self employed borrower.
Before the credit crunch 125% equity plans were available but only to employed borrowers with a good credit rating, and in those golden days of yore if a property was valued at 200,000 and the mortgage outstanding was 190,000 homeowner loans of up to a maximum of 60,000 were available.
Unsecured loans are more expensive than secured loans and homeowner loans have interest rates commencing at around the 9% mark.
As these loans are secured, lenders are not concerned about and never require proof of the purpose of the loan, unlike with unsecured loans.
If a loan is unsecured the loan granter always requires proof of what the loan is going to be used for. He will always need proof of loan purpose in the form of bills, estimates and so on.
With homeowner loans it is only a matter of stating the purpose for the loan on the application form and no proof will be asked for, making this a simple way to borrow money.
With secured homeowner loans you will have cash in hand to obtain the best possible deal whether it is when buying a car, doing homeimprovements, etc.
One of the most common reasons for obtaining a homeowner loan is to consolidate credit cards, personal loans and hire purchase.With the interest rate for secured homeowner loans being so much lower than credit cards, etc. there are massive savings to be made, and in addition to saving money the homeowner will have only one payment to make each month compared to several making finances easier to handle.
The only really sensible way for a homeowner to obtain a loan is via the secured homeowner route and these loans can be used for any legitimate reason.
by: Liz Moir
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Homeowner Loans Often Called Secured Loans Are The Loan Of Preference For Homeowners.