How to Get a Secured Homeowner Loan

It's harder to get a secured homeowner loan than it was a few years ago, but you can still get approval if you meet the new eligibility criteria. The problem that most prospective borrowers face is that they don't have sufficient equity in their home, they've lost their job, are unable to afford the repayment schedule or they have credit problems.

Home Equity

You are borrowing money against the equity in your home. The more equity that's available, the more money you can potentially borrow. Home equity is defined as the difference between the value of your property and the mortgages and loans that are secured against it. For example, if your home is worth £200,000 and you have a £150,000 mortgage, there's £50,000 of equity. The Loan-to-Value (LTV) is 75%.

Permanent Employment

Secured cash loans are a long-term financial commitment, so the lender wants to be as sure as possible that you can maintain the repayments. You're going to need a permanent job or 3-years of accounts if self employed. You won't get approval if you're in temporary work or still in your probationary period.

How Does Your Credit Rating Affect You?

When applying for a secured loan, your credit rating is important. If you've failed to comply with any of your lending agreements during the last six years, this will have been reported to the three credit reference agencies.

Although bad credit isn't a bar to getting loans for homeowners, the cost of borrowing will be higher. You're statistically more likely to default. You'll also need to have more equity in your home than people with good credit. If you do default, the lender wants to be able to comfortably recover its money.

Why is it Harder to Get a Secured Homeowner Loan?

The Council of Mortgage Lenders (CML) has predicted that there will be as many as 40,000 home repossessions over the course of 2011. While it's in the interests of banks to lend money to new customers, they only want to lend money to the right people. Poor lending decisions create bad debt, financial hardship for families and lead to adverse press coverage for the lender. Only borrow money if you can afford to make the repayments.

Where to Get a Secured Loan

  • Oceanfinance.co.uk
  • Nortonfinance.co.uk
  • Fluentmoney.co.uk

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