Wednesday 15 April 2015

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.

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.
Return to my homepage for more loans information.

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