Loans -
Large loans available to homeowners
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There are many advantages to owning your own home, which is why so many of us are desperate to climb onto the oft mentioned property ladder. Owning your own home means no wasted money going to unscrupulous landlords, possession of an asset which will always have value and the possibility of making a lot of money if you buy and sell wisely.
It also opens doors to further borrowing. Perhaps not what most mortgage holders will have had in mind when they first purchased their property, but a tempting option when times are tight.
Homeowner loans assess the value of your house against how much you still owe on your mortgage and that is the amount you can borrow. Such immense sums are not open on any other type of loan deal.
With the average house in the UK costing in excess of £200,000, a typical equity based loan is likely to be as big as £160,000. A loan this big is usually taken out for large investments such as home improvements, but is also often used for car purchase and debt consolidation.
Taking out a homeowner loan to improve your house can be a very savvy option for the aspiring property developers among us. A typical loft conversion costing £8,000 to do, will add over £15,000 in value to your home. That’s a return of almost double your investment.
Many people have a deep emotional attachment to their houses, meaning more to them than simply buildings. Houses are homes where life changing events have taken place alongside simple everyday events for years. For this reason many people would like to update their home as their family grows and requires more space, rather than moving to a new house.
A homeowner loan is the ideal answer for people in this position. It offers the opportunity to invest heavily in the biggest purchase of your life and make it perfect.
With all the benefits, it’s not surprising that many are tempted by the large loans they can take out simply on the basis that they own a house. While most lenders will take strict precautions to ensure that the borrower is in a position to repay such a large sum of money, many lenders are careless in their lending, putting both lender and borrower in an undesirable position.
If a mortgage holder takes out a homeowner loan, their property is at risk should they default on repayments. This is undoubtedly a disturbing position for the borrower to be in, facing the prospect of being homeless and losing the house they have so lovingly restored. What many don’t realise-sometimes lenders included-is that this is not a happy position for the lender to be in either.
Repossessing a home is a lengthy and tricky business and does not necessarily mean financial gain for the lender. In many cases the house is difficult to sell and the lender is forced to sell at below the market value. In addition to all the hassle involved with selling a property, high costs are incurred to the lender and they often do not make back the money they lost through lending carelessly.
Homeowner loans can be a great option for realising your dreams, but lenders and borrowers alike should take a responsible attitude to homeowner loans to ensure the best possible outcome for both parties. If you are considering a homeowner loan, assess whether you can afford the repayments, not only at present but in the future as well.
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| Loan quotations are provided by Leadbay
Ltd. Leadbay Ltd is authorised and regulated by the Financial
Services Authority. |
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