Get the best homeowner deals

There are multiple occasions where you might have to take financial assistance to meet with the demands of your lifestyle. This may include addition of a new family member to the more mundane purchase of a car or home renovations. Such big investments ensure that your normal everyday budget goes for a toss. Undoubtedly, finances will be a bit tight during such situations. However, there is a way out for all UK homeowners whereby with a little bit of planning, you can sail through this situation with ease.

People who are citizens of UK and own a house are certainly a privileged lot as far as monetary aid is concerned. To get through the financial crunch, they can apply for homeowner loans. Homeowner loans are nothing but a type of secured loans. It is a financial solution given to the homeowners by keeping their home as security in lieu of the loan amount. With lucrative interest rates and other benefits like deferred payments, three months repayment holiday, facility of accelerated payments; it’s no wonder that you have to take the risk of pledging your home to the lender.

Where can I get a homeowner loan?

There are a host of lenders in the UK market who offer homeowner loans at competitive APRs. You can procure loans from traditional banks such as high street banks and building societies. Besides this, you can also get monetary aid from financial brokers who will act as a medium between you and the financial lender. You can fill up their online forms mentioning your personal details and financial requirements. They will get back to you with various loan quotes. After that it’s up to you to compare loans and select the one most suitable for you.

What is an APR and how can I get the minimum APR?

APR is the annual percentage rate which decides the actual interest rate on your loan package. Lender takes into account your current circumstances and determines the APR for your package. They also consider your credit scores while deciding upon the APR. If your credit scores are well above 580, you will be entitled to have a low APR against the loan amount. The importance of credit score is less in the case of homeowner loans because it is a secured loan based on the available home equity. Therefore, homeowners with bad credit history, such as arrears, defaults or CCjs are also eligible to apply for homeowner loans. But, there would certainly be a discrepancy between the APR charged against them and others who have a more healthy credit score.

Is the loan amount responsible for setting the interest rate?

Your borrowings are indirectly proportional to the rate of interest charged. To make this clearer, we provide you with a simple example:

For instance, if your borrowings are above £5000 your interest charged will be around 6.3%.
If it is £3000, your interest will be set at 6.8% and if it is only £1000, it will fetch a heavy interest rate at around 7.4%.

Therefore, it’s apparent that a big amount will call for a low interest rate and vice versa. But this does not mean that you borrow more than what you can afford to pay back. Irresponsible borrowing will end up in the loss of possession of your home.

How is the loan amount assessed with subject to the available equity?

When you pledge your home to the lender, the available home equity is of primary importance. It’s the basis on which your loan amount is calculated. The calculation is done on the simple basis of the total equity available on your home minus all other debts and mortgages. For instance, if the present value of your home is £80,000 and you have a previous mortgage worth £30,000 against it, the final calculation will look like this:

Home equity     - mortgage= total loan amount
£80,000-£30,000= £50,000
On the basis of this calculation, the loan amount is sanctioned.

What should be the best mode of approaching the lenders?

These days many lenders have started processing loans online. You can visit the company web sites and check the product, its features and benefits. When you apply online, there is no processing fee charged against the loan application. Besides this, you can also go in for loan comparison before deciding on the final quote.