Don’t get surprised by reading the above caption-Your Home: A New Source of Income-Because now whenever you need money and if you are a homeowner, lenders are more than willing to offer you loans at comparatively cheaper rate than a non-homeowner. Infact, it is due to this unique advantage associated with houses/homes that these are called fixed assets.
Secured Loans:
There is always a little bit of risk associated with the loans offered by lenders to borrowers. The only difference among these loans is that some loans will have lower risk than others but according to lenders there is always some amount of risk in loan schemes. According to lenders, the various risks may be late payment of monthly installments by borrower, partial payment, no payment at all etc.
To reduce this risk element, lenders ask the borrowers to deposit any of their assets, which the lender keeps as security against the loans provided to borrowers. This security deposit is also called collateral, the most common of which is borrower’s home.
When a borrower offers his home as collateral to the lender, there is little chance that the borrower will default in making payment. Since, by taking borrower’s home as collateral, lender gets all legal rights to sell the home to compensate his loss, in case borrower does not pay according to the terms and conditions of the loan agreement.
homeowner secured loans: Loan amount, Cost & Payment duration
Homeowner secured loan, as the name itself describes, is the most secured loans for lenders since they get the legal right over the borrower’s property if borrower fails to pay as decided.
Infact, borrower also get advantage of this highly secured loan-How-since the lender has least risk in homeowner secured loan, lender charges less rate of interest compared to a non-secured loan, thereby making this loan cheaper for the borrower. Usually, loan amount varies between 80% and 90% of the total cost of the home.
In addition to the above, loan amount and rate of interest also depend on profile of the borrower, which include the monthly income, whether self-employed, or in job, number of years at current job, number of years at current residence, whether there is any existing loans etc.
The amount of monthly payment, also called equated monthly installment or EMI, any payment duration depend upon the loan amount, monthly payment capacity of borrower etc.
Homeowner secured loans: Eligibility
To borrow a homeowner secured loan, the borrower should have a permanent monthly source of income either through a job or self-employment and should be a homeowner. They should also have a savings bank account in which loan amount can be credited directly. They should also be a UK resident and more than 18 years old.
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