Home Owner Loan | The Complete Guide
Applying for a home owner loan is not the same as applying for a mortgage.
A home owner loan is an additional loan which allows you to borrow money based on the equity you hold in your home. The loan is secured against your house which means that you can usually get a better interest rate than if you applied for an unsecured loan, because of the lower risk it carries.
A home owner loan can be used for many different purposes.
One of the more popular reasons why someone would take out a home owner loan is for debt consolidation. A home owner loan can also be used for purchases such as home improvement, a new car, a holiday or even a yacht. There is no limit to what you can use your home owner loan for.
The uses for a home owner loan have become very varied and can often allow you to do something you would otherwise not have been able to afford to do.
This can include starting up in business, paying for a wedding, or coping financially with a sudden emergency which may require you to get hold of a sum of money fast.
By using your home owner loan for debt consolidation it means that you roll your smaller debts into one large debt. People often choose this option because they want the simplicity of managing just one debt.
A home owner loan can also sometimes be called a secured loan, but you need not just secure your loan against your home. You can also use a commercial or a semi-commercial property to secure your loan.
A home owner loan is sometimes favoured to remortgaging because the finance can be secured much faster.
Once you have applied for your home owner loan it is possible to receive the loan in as little as three to four weeks.
A home owner loan can be more popular than an unsecured loan because you are able to borrow more and you may also be able to get a much lower interest rate.
Think carefully before taking on a home owner loan
However you must think very carefully before taking on a home owner loan.
To get a home owner loan you must first own a house.
Your house is used as security for the loan so that if you do not keep up the payments on your loan your house may be repossessed.
This is so the loan lender can balance the risk of lending to you.
Your house will only be acceptable for a homeowner loan if your house is worth more than any outstanding debt that you have. How much you can borrow will depend both on which lender you want to apply for your home owner loan from and your own personal circumstances.
The length of your home owner loan and the interest rate may also depend on the value of your house and your ability to repay the loan.
For example a home owner loan could be taken out for an amount ranging around £3000 to £50,000 and even as high as £100,000 depending on the value of your property.
The term of your home owner loan could be anywhere from 1 year to around 20 or 25 years.
