You might be thinking about applying for a loan, and you are looking into all the options that are available to you. Something has lead you to look at homeowner loans, but do you know what these really are? If the answer is no, then that’s okay because we are going to discuss what a homeowner loan is, as well as what it actually entails and how it is different from certain other types of loans. So, it doesn’t matter how much or how little you know, because we’ve got you covered. Let’s take a look at what a homeowner loan is.

What Is A Homeowner Loan

You might have heard of this type of loan referred to as an equity loan or secured loan. What this means is that the value of your property is taken into consideration when you apply for a loan. So, essentially, you are using your home to help you borrow money like a mortgage. You need to own some property before you apply for this loan so that there is something to list the loan against once you have applied. This is a type of secured loan, and the property that you can list can include houses, bungalows, flats, and cottages. Landlords can also take out these types of loans secured against buy to let properties, and portfolios. These loans are usually arranged by loan brokers, so if you are interested, it would be a good idea to get in contact with one as most homeowner loans are not available directly to the public.

How Is This Different From An Unsecured Personal Loan?

A homeowner loan is different from an unsecured loan. This is because you do not have to put anything up against an unsecured personal loan. So, where you need to own property to be able to apply for a homeowner loan, this is not going to be the case if you want this other type of loan. There are a lot of companies who offer this type of loan as well, and if you do not own property, this is what you need to be looking in to. With a unsecured loan the most lenders will offer is around £25K over a 1-7 year term, however with a homeowner loan you can borrow larger amount over a longer repayment period.

What’s On Offer?

Lenders are usually willing to offer anything up to millions of pounds as long as you can afford the repayments and have the home equity to secure the loan. However, most loans are below £100,000 and popular amounts are around the £40,000 - £50,000 range and used for home improvements and debt consolidation purposes. How much the lender will let you borrow will depend on a number of factors. The value of your house needs to be considered, your income is also taken into account. On top of this, your age and how long you are going to take to pay back this loan will also be taken into consideration when you’re calculating how much you can borrow.

There are a number of different loan terms on offer. Many repayments are made in the space of 3 - 25 years, meaning that there is something here that will suit those borrowers who wish to pay back the loan over a longer period. You need to be careful though because interest will also come with this loan and you don’t want to be caught out here. The interest rate will vary depending on who you have borrowed from, and unlike an unsecured loan, this rate is not fixed so your lender may increase it if there is a change in the BoE interest rates.

If you are looking into applying for a homeowner loan, you can look at companies like Together Money, Masthaven, or Shawbrook bank. All of these offer homeowner loans with good interest rates and loan periods of up to 25 years.