Homeowner Only Loans
Borrow money with low-interest secured loans
- Renovations and improvements to your current property.
- Purchasing a new car or going on holiday.
- Paying for school fees or private tuition.
- Consolidating existing borrowing into a monthly repayment amount.
In today’s competitive economic climate, more and more people are finding they need to take out loans to finance purchases. While plenty of loan providers are available, finding one with the right terms for your requirements is no easy feat.
When it comes to borrowing money, homeowners have more options than most other people. Owning a property enables you to take out a larger loan and enjoy more favourable interest rates.
A secured loan could be the best solution if you want to pay for debt consolidation, home renovations, private school fees, or even a luxury holiday.
Find out whether you’re eligible for a homeowner loan, and what you can expect when applying for homeowner loans.
What are homeowner loans?
Homeowner loans – also known as secured loans and second-charge mortgages – are borrowing solutions that require you to use your home as collateral. It can be a residential house, flat or bungalow, but you must have viable equity in the property.
For example, if your property is worth £250,000 and your outstanding mortgage is £180,000, you would have £70,000 in equity.
The amount you can borrow depends on your equity, and lenders will offer an amount based on their criteria (which we’ll cover later).
As long as you make the monthly repayments on time, you can repay the loan without worrying about your property.
You could lose the property to the lender if you don’t meet your repayment obligations.
How does a secured homeowner loan work?
Secured loans are quite flexible because there’s no set amount that one person can borrow. It depends on numerous factors, but the most important is the equity you own in your home.
As we just covered, you can only borrow money for the portion of the property you own, so you can secure a large loan if you own a significant percentage of the home.
Once you receive the money, you can use it for numerous purposes, including:
Renovations and improvements to your current property.
Purchasing a new car or going on holiday.
Paying for school fees or private tuition.
Consolidating existing borrowing into a monthly repayment amount.
While secured loans are flexible, a lender will want to know what you plan to use the loan for and evaluate your application based on whether they think you’ll pay back the money.
A loan secured against your home will also have different interest rates depending on your lender’s agreement. Knowing the difference between them is essential – especially as they could impact your repayments.
Variable rates: Many loans use the Bank of England base rates, so your loan payments could increase if these change.
Short-term rates: Fixed interest rates for some of the term, but then you move onto the standard variable rate.
Fixed for term: These loans have the same interest rates for the entire duration. Even if the repayment period is ten years, you’ll pay the same each month.
The advantages of secured loans
Secured loans have many advantages, and if you understand what you’re getting into, you’ll find your homeowner loan opens up new opportunities to build a stronger credit score.
Here are the pros of applying for a homeowner loan.
The loans offer flexibility
While many borrowing solutions have strict rules about what you can use the money for, secured loans are more open. You can use them for legal purposes, but you should ensure you spend the money wisely.
Credit scores aren’t everything
Your credit rating will always be important, but homeowner loans aren’t dependent on an excellent score. You can still access a loan, even with a poor credit history, because you’re a homeowner.
As lenders use the equity in your home to calculate an amount, you might find that you’re still offered a loan and favourable terms because you have security for lenders.
The interest rates can be low
Again, as lenders have security in the form of your home, there’s less risk associated with the loan. While many loans have hefty interest rates, secured loans can often be less expensive each month – especially as you can borrow the money over a longer time.
Borrow larger sums of money
Homeowners can also borrow more money than people without a home. For example, most personal loans are capped at £25,000 because people cannot offer a lot of collateral – but secured loans are different.
If you have a lot of equity, you can borrow up to that amount – although lenders usually offer a loan-to-value ratio of 85%.
Some people can borrow up to £250,000 depending on their lender and equity, so there are plenty of opportunities to finance large purchases.
Extended repayment terms
Perhaps the most attractive benefit of secured loans is their long repayment terms, which are easier to deal with than short-term loans. You’ll usually pay these loans back over many years instead of months, giving you more flexibility financially.
Yes, there’s a longer commitment, but long-term repayments are much easier to budget than paying back a loan over a few months.
The disadvantages of secured loans
Of course, there are plenty of factors to consider before taking out a secured loan, as nothing is perfect. Borrowing money is always a commitment with potential consequences, and it’s essential to consider the drawbacks of these loans before applying for one.
The overall interest rates will be higher
When taking out a homeowner loan, you can spread the payments over a longer term – which is an advantage. However, doing this also means you’ll end up paying interest on your outstanding debt.
Some people don’t like paying extra interest, but these loans offer more security and can easily fit into your monthly budget.
It’s tempting to borrow more
You might know how much you want to borrow but discover you can borrow more. It’s easy to get carried away, but it’s also a huge mistake.
When you choose to borrow money, think about how much you can realistically afford and stick to that amount. Many people decide to loan more money, and they get into trouble further down the line.
There are serious repercussions if you don’t make loan repayments
When you take out a loan, the lender will expect you to make your monthly payments on time. If you default on the agreement, there will be repercussions – especially if it’s a recurrent problem.
You could risk losing your home and having a poor credit score, which will impact your finances in the future.
Most large purchases are subject to a credit search, and a high score is challenging to build up.
Most lenders have an early repayment charge
When a loan provider agrees to lend you money, they expect you to pay it back and do it within the allotted time (even if that’s years).
The main reason is that lenders want to receive interest for the loan, but if you pay it back quicker than initially agreed, they’ll sacrifice repayment amounts.
A loan provider will often include early repayment charges to get around this and still give borrowers flexibility.
These charges can be pretty high, so it’s essential to be aware of them before entering into a loan arrangement.
Is a secured loan better than an unsecured loan?
Unsecured loans are another option for people who don’t have a property to offer as collateral. However, an unsecured personal loan could be a good alternative if you want to borrow a smaller amount or don’t want to be tied into a long-term payment plan.
You can usually borrow up to £25,000 and pay the loan back over months instead of years. However, your eligibility for an unsecured loan is subject to checks from the lender.
People with a bad credit history are unlikely to be eligible, and if you have less than excellent credit, your lender will likely offer a loan with a higher interest rate.
How to get a homeowner loan
So, now you know more about secured loans, it’s time to consider whether it’s the right move for you. As long as you own equity in your property, you can get a loan, but the amount you receive will also depend on your credit rating and other factors.
Your circumstances, such as employment history and affordability, will also be considered, but the deciding factor will always be your property equity.
Believe Loans is a specialist broker dedicated to helping our clients find the right homeowner loan for their borrowing needs.
Here’s how we can help you improve your financial future.
We partner with specialist lenders
Mainstream lenders are fine as long as you meet their criteria. As a broker, we work with specialist lenders who are more willing to loan money based on an applicant’s personal circumstances instead of whether they tick each box.
As such, you’ll be able to find competitive rates and have access to providers that you might not know about.
Support during the loan application process
Our brokers don’t just give you the provider’s contact details; they support you through the homeowner loan application stage. Whether you need help with gathering your financial documents or arranging the loan, Believe Money is always available.
As an award-winning second-charge mortgage broker, we’re confident that we can help you find a deal that doesn’t compromise your existing mortgage. We work with people from all backgrounds and offer brokerage services to anyone, regardless of their credit score.
Zero upfront fees
Upfront fees are an issue with many brokers, and we completely understand that you don’t want to spend any money outright. We add our fees onto secured homeowner loans, so you won’t have to pay us anything until you begin making repayments on your loan.
Get a free secured loan consultation today
Whether you want to raise money for home improvements, schooling, or to consolidate existing debt, our dedicated team will ensure you have access to a range of loan providers.
Choosing us means you can save money and apply for a homeowner loan quickly. Please get in touch with us today if you’d like to learn more about our service.
How It works
Simple, easy application
We search our panel of lenders to find the deal that’s right for you
When you confirm your chosen deal, we get your application moving
The money lands in your bank
account – usually within two weeks
We compare loans from our panel of the UK’s top lenders to get you the best deal.
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