What are the Features & Benefits of a Home Equity Loan?
A home equity loan, also known as a secured loan in the UK, is an effective way to meet your long-term financing needs by using your house as collateral. People all over Great Britain use this type of financing to cover expenses their monthly budget will not allow for. Some use the cash to consolidate their high interest debts; others might use it to pay for home renovations or help defray the costs of sending the kids to university. At any rate, a secured loan lets you borrow substantial amounts of money based on the equity in your home.
There are many lenders out there promising fast cash on low-cost loans. However, be aware that not every lender delivers what it promises. As with any type of consumer product, some loans are better than others are. It pays to take your time researching and comparing lenders and loan offers.
To help get you started, here are five facts you need to know about a home equity loan:
1. Your Home Is Security
Lenders grant these loans based on borrowers offering their homes as collateral. When you borrow, the lender will place a second charge on your property. A second charge is a legal instrument allowing for the repossession and sale of your house in the event you default. While such repossessions are rare, it is something you need to consider before borrowing money. Make sure you have the means to follow through on your repayments so that you do not put your home at risk.
2. Representative APRs Not Guaranteed
The law requires lenders to advertise representative APRs in order to help consumers understand the total cost of borrowing. However, not every application has to be approved at the advertised rate. Banks need only approve 51% of the applications in order to meet legal requirements. You could still pay more than the representative APR advertised by a bank.
3. Bad Credit Okay
One of the least talked about benefits of the home equity loan is the fact that you can still obtain funding even with bad credit. As previously mentioned, lenders are more willing to loan money because you are offering your home as collateral. This reduces their risk and opens their vaults. Having said that, bad credit will usually result in less favourable terms and a higher interest rate. However, that is a small price to pay if your credit prevents you from obtaining other sorts of financing.
4. Multiple Applications Can Hurt Your Credit
Every time you apply for secured loan, the lender will run a credit search on you. That credit search goes on your official record and counts against your credit score, so multiple searches in a short period will negatively affect you. What does this mean? It means that you should apply with a single lender to start with. If you are rejected, do not immediately apply with a second lender. Instead, check your credit history to see if something is amiss. This allows you to correct any problems before applying the second time.
5. You Can Borrow up to Your Total Equity
Another great benefit of a secured loan is that it allows you to borrow money up to the limit of your equity. If you have £50,000 equity in your home, you should be able to borrow that much with good credit and a proper loan-to-value ratio from the lender. The equity in your home unlocks the potential for borrowing tens of thousands of pounds for whatever purpose you deem necessary.
If you own property, you own an asset that could open the door to substantial funding to cover nearly any need. Why not put your home to work for you? Secured Loan Experts urges you to look into an equity home loan to finance property renovations, consolidate high interest debt, or cover other expenses your monthly budget will not cover.
If you would like some free professional help and advice on obtaining the best home equity loan just call our friendly team of experts today. They will help you source, compare and select from the best possible deals available from our whole of market panel of top high street and specialist lenders. When you have chosen the most suitable deal our experts will create and submit an optimised application on your behalf ensuring that your case is presented to the lender in the best possible manner and liaise with the lenders underwriters to maximise the chances of your application approval.
We don’t work for the lender and our only concern is to make sure you get the best deal to suit your individual requirements.
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