Homeowner Loans

What is a homeowner loan?

This is usually secured on a property, although the property can be mortgaged through another lender such as a bank or building society, assuming that there is some equity in the house. For example, your mortgage may be £100,000 spread over 20 years and the house is worth £150,000, therefore, the current equity remaining is £50,000, which in theory can be used as security.

Why are lenders keen to offer loans to homeowners?

As far as the lender is concerned, there is less of a risk in terms of the repayments not being met as the loan offered is secured against an asset. Potential lenders will also take into account that you are paying a mortgage and therefore may be more reliable in terms of repaying a homeowner loan.

What if I have adverse credit?

Applying for a bad credit loan if you are a homeowner with equity increases your chances of being successful, because the lender is offering a loan against your property which is security in itself. If your homeowner loan application is successful it is possible, however, that the interest rate may be higher depending on the severity of your bad credit history. Every individual is different and many other factors are taken into consideration by finance companies when assessing bad credit loan applications from homeowners, such as current income, the ability to repay, existing loan and mortgage commitments and the purpose of the loan which, if it was for home improvements, may add value to the existing property.