Why Home Owner Loans Offer Better Rates

Getting a home owner loan, sometimes called a home equity loan, has grown in popularity in recent years due to a number of different factors including better interest rates, better terms, and in some cases tax deductibility of the interest. 

There are of course, a few things that you need to look out for when searching for this kind of loan,

just like anything else, you need to be careful.

Let's examine a few the benefits and disadvantages of these loans to help you get started in your search.

Added Security to the Lender

In the finance industry loans that are secured by valuable real estate will usually have a lower interest rate, a longer time to repay the loan, and are easier to get because they are backed up by the equity in your home. 

Of course the theory is, since it is your home and you don't want to lose it, you're definitely more likely to make the payment, so the risk is lower, and therefore a better investment for the bank. On the other hand, if you do fail to make the payments you could lose your home, so it's important to take care of your largest investment to the best of your ability.

Available For Many Different Purposes

An equity loan on your home can be used to consolidate debt, a college education, purchase a car,

make home improvements, or go on holiday, among other things. In some cases if you owe a lot of debt, a lender may require you to pay off some of that debt with the loan when you receive it. However, in many other cases there is no requirement other than you have the ability to repay the loan, decent credit, and enough equity in the home as well. 

Typically the maximum amount of money able to be loaned on your home is determined by your income, credit history, the appraised value of your home, and the amount of your first mortgage all combined.

These kinds of loans can have repayment terms from 60 months all the way to 15 years, depending on the lender involved.

It May Be Possible to Get Home Equity Loans on Rental Property

If you have plenty of equity in a rental property it may also possible to get a homeowner loan on that as well, however the rules will be different as the amount of equity required, and credit qualifications because there is an increased likelihood that the loan may go bad when it is not your primary residence. 

Take advantage of the extra equity you have acquired any residence can be a wise decision rather than paying ultra high interest rates on credit cards or unsecured loans. Is also important to take extra care in today's economy to make sure you always have the ability to repay the loan since it is secured by the home you live in.

The following information offers an easy to follow guide as to how these loans work.

A Guide To Homeowner Loans

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If you are thinking of applying for any type of personal loan, please check out the following Independent article offering 10 top tips - http://www.independent.co.uk/money/loans-credit/10-tips-for-taking-out-a-personal-loan-8205679.html

If you would like to find out more information about this type of finance, please visit my other blog as a great source of information via the following link - http://homeownerfinancemadeeasy.jigsy.com

For some of the best secured personal loans currently available in the UK, head over to the Solution Loans website.

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Do Home Loans Offer The Chance To Borrow A Lot of Money?

If you need to borrow a lot of money in order to pay off debt, help your child through university, start a business or do anything that requires a large sum of money, turning to home loans may offer the ideal solution.

Can You Borrow A Lot Of Money Against Your House?

In the old days, many lenders would offer to refinance houses for over 100 percent of their market

value. The bursting of the real estate bubble put an end to this practice. Today, lenders will only lend from 80 to 85 percent of a home's equity in most cases. That means if you have £100,000 worth of equity in your house, you might be able to borrow up to £85,000. 

Of course, having equity in a home provides some financial security. You know that you won't have to write a check to sell your house for its market value, for one thing. Also, securing a loan with a property can be risky. If you default, the bank or mortgage company could take your house in extreme cases. These days, lenders are more likely to work with borrowers who got themselves in financial trouble.

What Are Good Reasons To Borrow Against A Home?

One of the biggest reasons that people decide to take out home loans is to take advantage of lower interest rates. They can use the cash to pay off high-interest loans like credit card debt. This should improve credit scores for two reasons:

• Creditors tend to regard secured debt more favourable.
• Paying off high-interest rate debt should free up more cash to improve finances.

Of course, some homeowners have other reasons to borrow against their houses. In some cases, they

may want to help a child finance their education. Some homeowners may even want to further their own education. In other cases, a homeowner could have plans to start a business. He or she might choose to use equity funding in order to finance this new venture.

Does Credit Have To Be Good To Take Advantage Of Homeowner Loans?

In order to qualify for a refinance mortgage or home equity loan, credit scores have to be fairly decent. In any case, the better the scores, the cheaper the loan is likely to be.

Organising Your Finances

If you feel as though you have to turn to this option because of your financial situation, getting your finances in order may open up other doors in the future.

The following video offers some great tips on budgeting to help bring finances under control -

• For more information regarding interest rates and how they are calculated, please take a moment to read the following article - http://en.wikipedia.org/wiki/Annual_percentage_rate
• If you believe that your credit rating is limiting your borrowing options, the following Nasdaq article offers a number of alternatives - http://www.nasdaq.com/article/5-best-loans-for-people-with-poor-credit-cm462112

Please return to my home page for more information relating to home owner loans.

Can I Get a Homeowner Secured Loans if I Have a Poor Credit Rating?

If you’re wondering if you can still get a homeowner loan even if you have a poor credit rating, you should know that the answer to the question is “it’s possible”, however, there are some conditions.

Understanding What is Expected

In order to understand what we mean, we must first understand what a homeowner loan is. A

homeowner loan is a secured loan whereby you use your house as a guarantee that you will be able to repay your loan. 

With a good credit rating, you can get a large loan amount at low interest rates and longer payment terms. How much money you can get on a loan really depends on the equity of your house, which is equivalent to your home’s value minus any mortgages and loans. The interest rate, on the other hand, is variable and largely depends on the borrower’s credit rating. Obviously, with bad credit rating, you will need to pay for a higher interest rate.

Exploring Your Options

While there’s no guarantee that traditional financial institutions like banks will grant you a loan, there are many non-banking lending institutions out there that would be willing to loan money to you. But again, as we said, be prepared to pay higher interest rates. 

If you've been suffering from a bad credit rating, you would do well to repair your score first before applying for a loan if you’re not using the money for any emergency. A bit of research will help you to identify some tips to help you to rebuild your score.

Contact Lenders Directly

You can contact lenders one by one and present your case, or you could also get in touch with a loan

broker or specialist. Between the two, we suggest that you do the latter. Specialists and brokers typically have many lenders in their list, and if you talk to them about your case, they will find the appropriate lender for you. Not only that, they will also do the necessary paper and administrative work so you only need to wait for the money to be released.

Resources

If you are thinking of turning to this type of finance because you are faced with mounting debt, the following video will help to break down the best ways to face up to this problem and offer advice on moving forward.

• The following Citizens Advice Bureau article provides a little insight into the decision making process that lenders go through when deciding whether to grant a loan application or not - http://www.adviceguide.org.uk/wales/debt_w/debt_borrowing_money_e/how_lenders_decide_whether_to_give_you_credit.htm
• If you are still unsure how important having a good credit score is, the following Investopedia article explores this is much greater depth - http://www.investopedia.com/articles/00/091800.asp

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Are Home Owner Loans Suitable For Early Repayment?

Anyone taking a homeowner loan usually agrees to a certain period in repaying the loan. You may decide how many months or years you require to repay the homeowner loan depending on your repayment capacity. This is how a homeowner loan is usually approved. What if you find yourself in a position being able to repay the loan earlier? You may receive some unexpected funds or get a bonus at work. What if you were to win the lottery? In fact, no one knows when they are going to be

lucky. In a situation like this, is it possible to repay your homeowner loan earlier? 

This article provides some important facts for homeowners, who are wondering whether they are able to repay a homeowner loan earlier.

Checking with Your Lender

A homeowner may want to repay a homeowner loan earlier in part or full, depending on the amount of additional funds they receive. There are many banks and financial institutions that permit homeowners to repay their loans early. As a homeowner, the first thing you should do in such a situation is to consult your bank. Inform them of your desire to repay the loan earlier, in part or full. 

The majority of financial institutions and banks would definitely facilitate such requests from

homeowners. The bank would reduce the amount of interest overall in such a situation. The bank will provide the homeowner with an early settlement quote. This quotation will reveal important details such as the reduced interest amounts, the amount of money you still owe to the bank, any early repayment charges, the early settlement figure due to the bank and the settlement date. 

This quote is usually valid for 30-days. This will give you enough time to consider the figures and decide whether you want to go ahead with the early repayment idea. You will continue to pay interest on the outstanding balance of the loan during this time.

Will You Have to Pay Early Repayment Charges?

As for the early repayment charges, the Consumer Credit Regulations (Early Settlement) of 2004 permits the lender to charge up to 58-days of interest in the event that a client decides to repay the full homeowner loan earlier. If you are closer to the end of the loan period, it would not be worth repaying the loan in full considering the interest you'll pay.    

The aforementioned is a comprehensive overview of the possibility of repaying a homeowner loan early.

The following video explores ‘home equity’ in greater detail -

      

For a closer look at the benefits of repayment debt earlier than anticipated, visit here - https://www.moneyadviceservice.org.uk/en/articles/how-to-reduce-the-cost-of-personal-loans

• For more information regarding secured debt and why lenders look for this extra level of security, visit the following article - http://en.wikipedia.org/wiki/Secured_loan
• If you would like to improve your chances of obtaining a substantial financial agreement, the following Guardian article offers some helpful hints and tips - http://www.theguardian.com/money/2010/mar/04/improve-chances-getting-mortgage

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