Bad
credit health is as much the reality of Modern Lifestyle as is the easy
availability of credit for online splurge. Call it financial ignorance or
nescience, struggling to repay your mortgage instalment could be disastrous for
your credit report. Before you fail to meet your credit bills and loan
instalments it is important to learn about secured homeowner
loans and protect your credit score from floundering further. You can
also use home equity loans to improve your credit score.
What are homeowner loans?
Being an owner of
residential property you can raise credit for more than value of your property.
Many people do not know about the second charge available on their property.
Despite the current mortgage one can raise loan against the home equity owned.
Homeowner loans are basically the secured loans raised against home by the
homeowners with part of their home equity. This loan runs parallel to your
current mortgage plan but the rate of interest is not influenced by your
previous loan. You may or may not borrow from the mortgage borrower. Many
private lenders offer unsecured homeowner loans to home owner with substantial home
equity.
How to calculate homeowner loan amount
available to you?
You do
not need a homeowner loan calculator to do the mathematics involved here. It is
no rocket science. Let’s take an example to understand how much is available to
you when you are the own home equity.
Let’s say you are the owner of a home worth £350000 and you borrowed a mortgage
plan of £310000 for 10 years. You want to renovate your home and wish to raise
a loan up to £70000. At the end of four years you have paid £120000. Let’s find
out if you are eligible for the loan or not.
According to the details above, you currently own the home equity worth
£160000. Most lenders can are willing to extend 70 to 80 per cent value of
property. In this case you can conveniently borrow up to £110000 to £120000.
Using this simple method, you can evaluate if you are eligible for the loan or
not.
Things to know before availing home
owner loan
The homeowner loan is absolutely independent of your previous mortgage. However
before you avail the loan you must keep following things in mind.
1. Do not borrow more than what you need
Irrespective
of what is available to you, always apply for the amount you need. You should
never borrow more than what is required. Have clear pre assessment of your
exact loan amount. Make a ledger and have a list of expenses you are targeting.
Do not forget to have practical evaluation of each cost involved. You would not
want to re-apply for more on account of erroneous estimates.
2. What if you fail to repay homeowner
loan?
When you fail to
repay home owner you may risk the ownership of your property. Being a secured
loan, you basically pledge your property for the loan amount. As the lender
gets security of loan collateral they offer high amount at lower rate. Thus you
need to have a fool proof repayment plan in place.
3. How to ensure a successful
repayment?
To ensure the
success of loan repayment it is important to have practical assessment of your
loan repayment capacity. You need to have clear estimation of your income and
expenses. Who can assess that better than you? However if you find calculations
too intimidating for yourself, you can seek free loan guidance from a loan
broking firm. They generally do not charge borrowers but earn commission from
lenders.
4. When to raise home owner loan?
Many people use
secured home owner loan for home improvement, refinancing or consolidating
their loans. This helps them avail cheaper single loan. You can avail debt
consolidation loan or
personal homeowner loans for the purpose. Opt for homeowner loans only when you
need huge funds at lesser rate.
5. Can I borrow unsecured homeowner
loan?
If you do not want
to risk the ownership of your home and still seek an unsecured homeowner loan,
you would need to go to private FinTech players. Many loan partners working
online offer unsecured loans
to homeowners. With an asset attached, your credit worth is rated higher than
the tenants.
6. Setting up instalments of loan
Another important factor to pay
attention to is the loan instalment. As important is to set up the loan amount
and duration wisely as is to ensure the affordable instalment for the same.
When you borrow considering the cost of loan, you are more likely to repay on
time.
Homeowner
loans thus provide a viable opportunity to home owners to mend their credit
health and lead a quality life all at the same time. Whether you need funds to
replace the boiler or to renovate your backyard, gracefully find the financial
help your way!
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