Home Owner Secured Loan UK
A UK home owner secured loan allows a home owner to borrow money against the available equity in their residence. The money borrowed can be used to pay off high interest credit cards, make home repairs, pay for college or wedding expenses, cover medical bills, take a dream vacation or buy a new car.
When a home owner considers taking out a UK home owner secured loan, it is important to take out a manageable loan. Making timely monthly payments is essential to have a favorable credit rating. A home owner receives a loan based on their credit worthiness, income and available equity. Loans may be taken out for a period of time ranging from three years to thirty years. Secured homeowner loan programs allow home owners to borrow between five thousand and two hundred fifty thousand or more. There are several different home owner secured loan programs available, such as:
Fixed rate home owner secured loan UK programs. A fixed loan charges the same interest rate on the money borrowed for the entire term of the loan. The interest rate never changes so the monthly payment is predictable.
Variable rate home owner secured loan UK programs. A variable rate changes over the course of the loan, depending on the current base rate and the term of the loan agreement. Because the rate changes, the monthly payment amount paid on variable loans can be unpredictable.
Ballooning or “interest only” home owner secured loan UK programs. A balloon mortgage allows the borrower to pay only interest during the beginning years for the lowest monthly payment possible. Later, the principal becomes due and monthly payments get much larger. This mortgage is advantageous for people who are assured their income will increase over the years. These mortgages are becoming increasingly popular with this crowd because a recent survey done by the Council of Mortgage Lenders revealed that 34 percent of mortgages taken out on January, 2007, were interest only mortgages. As of 2003, only 12 percent of mortgages were interest only, showing a growing demand for this type of financing.
The amount of any UK home owner secured loan will be based on the available equity in the residence. Although borrowers question whether equity in homes will continue to rise, the facts show that homes continue to increase in value. Recent studies by Nationwide showed that home values increased 0.4 percent during March, 2007. As borrowers make timely payments, they improve their credit and build equity in the residence. Reasons to take out a home owner secured loan UK may be:
Consolidate debts and meet necessary expenses. High interest credit cards that carry a balance cost additional money. Inflation makes it difficult to meet expenses. According to the Bank of England, over the past year the consumer price index (CPI) rose over three percent, which is above the target rate of two percent. Although there have been price cuts in major utilities and governor of Bank of England, Mervyn King, state the CPI is likely to fall back in to the target range, “in a matter of months”, expenses need to be paid right away. Taking out a UK home owner secured loan can help the borrower get through hard times without compromising their credit rating or comfortability.
Make residential repairs. A secured home owner loan may be taken out to make necessary residential repairs and update appliances or heating systems. These residential repairs will increase the value of the home and create additional equity to increase the borrower’s net worth.
Pay for wedding or college expenses. A recent survey conducted by NatWest revealed that the average university graduate left with an average amount of debt totaling £13,252. Many parents assist children with college and wedding expenses to offset the amount of debt a young person has by taking out a UK home owner secured loan.
Purchase an updated car or take a luxury vacation. A lump sum of cash is extended to the borrower of a home owner secured loan. This money may be used in any way the borrower wants. A newer car that doesn’t break down or that trip of a lifetime can be purchased with the proceeds of a UK home owner secured loan. Often a home owner has to save for years to obtain these items, but a loan makes it possible to get them right away.
A UK homeowner secured loan can simply give the borrower financial relief from everyday economic stress. Research performed by the Financial Services Authority (FSA) showed that twenty-seven percent of couples argue regularly about their finances. About of third of all couples not only lie to their partner about the amount spent on credit cards, but they lie awake nights unable to sleep because of financial stress. Taking out a home owner secured loan can put money problems to rest one and for all.