For Homeowners to Borrow
By Liz Moir
There are as many types of loans as there are hot dinners and they fall into two main broad groups and that is secured and unsecured.
As unsecured loans are exactly what they say on the box, no form of security whatsoever is required or asked for when making an application, and as such everyone in theory can apply for these loans.
When talking about any form of borrowing the word theoretically must be attached initially as the successful application for a loan depends on a number of factors such as income that is the earned income of the applicant, status which refers to the lender receiving a credit reference agency report concerning the applicant's credit rating that is acceptable for loan purposes, etc.
Both tenants, that is those who do not own their own home, can apply and be considered even now for unsecured loans, but as the underwriting is so very very tight now the success rate is extremely low. Welcome Finance used to advance loans to tenants.
However the interest rates were high and the maximum loan value was low often up to about £2,000 maximum. Welcome of course also advanced loans to homeowners as did other lenders such as Blackhorse, etc.
Now since the credit crunch there is really no place tenants can achieve the money they require. Homeowners however are in a very much better position as if they have equity in their property they can apply for a secured loan otherwise called a homeowner loan.
There really is no need a homeowner shopping around for these scarce on the ground unsecured loans as if the homeowner fits the secured loan lenders criteria secured loans / homeowner loans are still readily available.
Homeowner loans are available at excellent interest rates starting at about 9% APR these days.They are based on the equity in a property, and what equity is is the difference between the value of the property and the outstanding balance of the mortgage secured on the property. If a property is worth £350,000 and the mortgage balance is £200,000 the maximum equity would be £150,000.
Since the recession equity has has tightened and the maximum LTV for an employed applicant is 80% and 70% of the homeowner loan applicant is self employed. This means that based on the previous example a self employed applicant would be eligible for a maximum homeowner loan of £45,000 and for an employed applicant the maximum homeowner loan available would be £80,000.
If someone has a poor credit rating bad credit loans are available as long as they are secured on property at 60% LTV if the credit rating is a little poor and 50% for homeowners with very poor credit scores.
Therefore if a homeowner needs money for any purpose the best and cheapest way to borrow is by arranging a homeowner loan.
Article Source: http://EzineArticles.com/?expert=Liz_MoirFor Homeowners to Borrow
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