How Does A Home Loan Differ To A Mortgage?
A mortgage is a loan that is offered purely to help the borrower buy a property. However, while a home loan is secured on a property in the same way as a mortgage is, it can be used for a variety of purposes. Many people who take out a home loan will still be paying off their mortgage, and there is no reason why the two loans cannot be managed in conjunction with each other, as long as the debt is managed carefully to ensure it is affordable for the borrower.
Who offers a home loan?
Competition in the home loan market has grown significantly in recent years, demonstrated by the amount of money companies are willing to spend in recent years to attract new customers. According to research company Datamonitor, the home loan company which advertised the most for new business spent £9.9m on its advertising in 2005 - a year later that figure had doubled to just under £20m being spent on advertising, showing just how competitive the home loan market had become. In fact, price comparison sites suggest there are over 150 home loan providers on the market. This competition can be good for you, the customer, though, as it helps drive down the cost of borrowing money.
So will it be easy for me to get a home loan?
It is true to say there are a lot of companies which offer a home loan, but that is not to say everybody who applies for a home loan will be given one. If you are looking to borrow more money secured on your home, lenders will first consider how much debt you already have, such as how much your current mortgage repayments currently cost. They will also consider other factors, such as how much you earn and what your credit record is like in terms of keeping up with your credit repayments. This information will help them decide whether you are suitable to take out a home loan, and also the interest rate they are prepared to lend money to you at.
Because there is so much choice in the market it can get a little confusing deciding who to apply to for a home loan. Talking to a broker can help. If you choose an adviser that which uses a wide panel of different lenders then they can help compare different offers on the market and help you decide which home loan is best for you.
What can I use a home loan for?
Quite simply, anything you need the money for. A home loan can be used to pay off your current outstanding bills with the money you raise, make a new purchase or put the money into home improvements. Whatever your circumstances, or whatever you're hoping to achieve, if you're a homeowner that needs to borrow some money, a home loan can help.
