Making use of homeowner loans

Homeowner loans are a form of borrowing that provides you with potentially larger sums of money, and the loan provider with security and confidence.

The overview

You may need a loan for any one of a number of reasons, perhaps including:

• you wish to extend or significantly refurbish your house;
• you would like to erect a conservatory
• you are trying to start up a business.

Obtaining a loan for more substantial sums always involves convincing loan providers that you are creditworthy.

One way of doing so is by offering security in the form of an asset.  This may be something such as a car or more commonly, your home.  

The security means that there is a legal agreement in place, which would give the loan provider the right to seize and sell the asset in the event you defaulted on the repayments.

Of course, your asset remains totally safe and secure if you maintain repayments against the loan in accordance with the agreement contract you will have signed.

The advantages

It is always risky to generalise where lending is concerned, as one provider’s homeowner loans may not be exactly the same as another’s.

Yet as a general rule, secured lending as opposed to ‘unsecured loans’ (sometimes called personal loans) may provide you with:

• faster access to cash;
• larger sums of money;
• more advantageous interest rates;
• possibly slightly less demanding credit history criteria.

The reasons for this are all to do with the fact that loan providers typically see homeowner loans as being of lower risk than other forms of unsecured lending.

Joint assets

As you may imagine, loan providers will typically have certain requirements relating to the asset offered as security.

Typically it will need to be:

• owned by you rather than by somebody else;
• of higher value than the loan amount;
• something that has equity in it to the value of the point immediately above (in other words, if you use your house as security, the difference between any outstanding mortgage and its market value must be higher than the amount of the loan you are seeking).

It is typically possible to use an asset you owned jointly with someone else, perhaps this is most commonly seen with property ownership.  

The other party will need to agree and sign a legally binding document, confirming that they have approved use of the asset for the purposes of helping to secure a loan.

Application

We know that, used responsibly, homeowner loans may be a way of freeing up equity in your property or in another assets such as a car, allowing you to deploy those funds as you think fit. We will happily provide further information upon request