4 things you must know about homeowner finance
Getting a loan can be a tricky situation if you have a poor credit rating, so one way is to apply for a secured loan (or homeowner loan).
However, if this is a route that you are considering it is important that you don’t enter any agreement without first knowing exactly what you are entering into.
Below are some of the most important things that you should know:
No. 1 – Getting a homeowner loan is not always as easy as it may seem
Many people think that the process of getting a loan is complicated and this can be the case with this option.
There are a number of conditions which m you need to meet before you can get a homeowner loan. Most of these conditions are there to protect the homeowner from losing his/her home. The first thing that is checked is the credit ratings of the homeowner. This is important because it shows your ability to repay back the loan.
If you have a credit history which shows a record of mounting debt and missed repayments, the type of deal that you may be offered is likely to be much worse than if your file shows that you have only a small amount of outstanding debt and have a record of making all of your repayments on time.
This information may also play an important role in determining how much your lender is prepared to offer you.
There is a fundamental difference between secured and unsecured loans. Click here to find out more.
No. 2 – The loan amount you get depends on the value of the property
The amount available from your lender is likely to be determined in large part by the value of your property.
Anyone who is willing to offer their home as surety against the balance of their loan can apply for a homeowner loan.
No. 3 – Options available
Whilst some people prefer the security of fixed APRs, others prefer to take their chances with a variable rate in the hope that the rates may fall. Fortunately, when applying for this type of finance, you may find that both options are available to you.
A variable plan is great for a time when you are expecting the interest rates in the market to decrease in the near future. If on the other hand, you expect the interest rates to rise, then the fixed-rate plan is the best option.
Considering the two options will save you a lot of money. Although the difference in percentage might seem small, converting them to money will show you the truth.
No. 4 – Secured loans are very different from unsecured loans
Many people try to get an unsecured loan before opting for the secured loans. One main difference between the two is that with a secured option, the decision to lend doesn’t solely lie on the credit ratings.
This means that having a poor credit rating will do little to scupper your chances of getting a loan. The loan is referred to as secured because the loan is secured against the property.
For more on the differences between secured and unsecured loans, please check out the following article – What is the difference between secured and unsecured debts?
Exploring Alternative Options
If you feel as though this type of loan poses a few too many risks and would like to explore your alternative borrowing options, the good news is that we can help you obtain affordable loans that do not put your property at risk. Contact us today for access to the UK’s very best direct loan lenders.