A homeowner loan is a loan that is secured against your home or property and is commonly used to borrow money for lifestyle purposes, home improvements or debt consolidation. As the name suggests, you simply need to be a homeowner or owner of the property in question.
Homeowner loans are often known as ‘secured loans’ since you are securing your loan against the value of your property. The rule of thumb is: the higher the value and more equity you have in your home, the more you can borrow or higher loan-to-value (LTV) you can access.
Customers can apply for £1,000 to £2.5 million or more, depending on the value and equity they have in the existing home.
You could potentially risk losing the property or some equity in it if you cannot keep up with your repayments. Lenders will always try to avoid repossessing your home and this is usually a last resort.
Lending Expert offers a quick, simple way to get an initial homeowner loan quote. We work with the entire market in secured and property lending and we offer a full comparison of market rates available and can help find the best quote for you. Simply click on ‘check eligibility’ below and you will be taken to our online application where you can fill in some details and get an indicative quote in less than 5 minutes.
What Are The Key Features of Homeowner Loans?
- Borrow £1,000 to £2.5 million
- Loan term of 1 to 35 years
- Rates from 3.34% APRC
- Houses, flats, bungalows accepted
- Security at risk
- Used for home improvements, debt consolidation, gifting to family, business purposes and more
What Are The Different Types of Homeowner Loans That I Can Apply For?
Secured homeowner loans: Homeowner loans are typically classed as secured loans, because the loan is secured against your property. It is also known as a second charge loan or second mortgage, because it is the second charge after the first mortgage repayment coming out of your property. Being second charge, it means that you are able to borrow less than your first main mortgage. Since your collateral is at risk, you may risk losing your property if you cannot keep up with your repayments long-term.
Unsecured homeowner loans: Homeowner loans can also be unsecured, where you are not securing the loan against your home or flat and instead, you are eligible based on your credit score and income.
As a homeowner, you will typically be considered a very good person to lend to because you have been through the rigorous approval process of getting a mortgage and are used to making regular monthly repayments. If you have maintained a good credit score over the years, a homeowner can usually get access to an unsecured loan with low rates.
Buy to let mortgages: This is used by property investors or homeowners who are looking to rent out their properties to tenants. You are buying the property to let or rent it out to others.
This is a type of homeowner loan because it is secured against a property, however, the structure of the loan is a little different because it is being rented out to other people and you will require a minimum deposit of 25% of the loan value. For more information, you can compare buy to let mortgages here.
Equity release: This type of homeowner loan is used by those aged 55 and over to release cash currently tied up in their home. It is a popular choice for those looking to raise finance but also looking to stay in their residence long-term. The average amount borrowed is around 35% to 50% of the value of the property and charged at an interest rate of 5% of the amount withdrawn.
Home improvement loans: These are used to finance home improvements such as adding new extensions, renovating kitchens, bathrooms and conservatories. This can be a good investment into improving the overall value of the home and indeed your quality of life. Many households use home improvement loans to make their homes more adjusted to senior living, with the use of ramps, stair lifts and easily accessible bathrooms.
Debt consolidation loans for homeowners: You can use a homeowner loan for the purpose of consolidating your debts. Secured against your property, you are able to take all outstanding debts for credit cards, loans and education and put them into one single repayment each month. This allows you to continue living in your home, make your debt more efficient to pay off and eventually finish the loan term debt-free. See debt consolidation loans.
What is The Eligibility Criteria?
- Over 18 years of age
- UK resident
- A homeowner
- Have equity in your home
- Can afford monthly repayments
- Your property is in good condition
What Information Do I Need to Apply for a Homeowner Loan?
- Name, DOB, current address
- Monthly income and expenses
- Loan amount and term
House and personal checks
- Credit check
- Provide recent income and payslips
- Confirm you own the property and equity
- Property valuation
Can I Borrow with an Outstanding Mortgage?
Yes, you can borrow money with an outstanding mortgage – this is very common. You are not required to own the property outright. However, the more of the property you own, the more you may be able to borrow.
Can I Get a Homeowner Loan with Bad Credit?
Yes, you can get a homeowner loan with poor credit and this is common for people who have been turned down by banks and other mainstream lenders.
Whilst you may not have a perfect credit score, being a homeowner means that you have a valuable asset, which should maintain its value or be worth more over time.
As a borrower, you are able to leverage the value of this property and borrow money based on its value and your equity in it.
The homeowner lenders that we have partnered with at Lending Expert are willing to take a view on bad credit histories and those with IVAs and CCJs – and provided that you meet the other criteria, you can still get the funds you need with a bad credit score.
How Much Will a Homeowner Loan Cost Me?
Homeowner loan rates start from 3.34% APRC from Lending Expert and this will vary between lenders and borrowers. To get access to the lowest rates, you should have good equity in your home, low debt-to-loan ratio, good credit rating and a stable income to afford repayments.
You can use our comparison table to compare homeowner loans and find the best rates and terms for you.
Are There Fees I Should Be Aware of?
Yes, if secured against your home, you will likely incur valuation fees (between £400 to £1,000), legal fees (depending on your solicitor), land registry fees and sometimes broker fees (1% to 2% of loan value).
How to Get the Best Deal on a Homeowner Loan
Some homeowner lenders offer their products with fixed or variable rates – allowing you to choose between a fixed rate which remains the same throughout, or a variable rate which could be cheaper based on market conditions.
Be sure to think about how long you would like the loan for and what it will be used for. If you find that you are in a position to repay early, you can usually do so, however early redemption fees may apply.
How is Lending Expert Different?
At Lending Expert, we are a homeowner loans broker and proud to be offering a full overview of market rates and terms. Our service is completely free to use and all quotes provided are completely no-obligation.
Our mission is to maximise transparency in the industry and we aim to make all the rates and fees clear for the customers to see.
Acting as a broker, we can package together your requirements and put them in front of the lender who is mostly likely to approve and offer you the most competitive terms.
We can also provide sound advice, helping you save money and get added flexibility wherever possible.
How to Apply for a Homeowner Loan with Lending Expert?
You can compare homeowner loans using the table provided by Lending Expert and then click on ‘check eligibility’ when you are ready. When you complete our online form, you will be given a series of pre-approved quotes, and you can compare deals and find the right one for you.
We act as a broker, helping you compare the full market of rates and get a truly tailored quotation for you and your requirements.
We will not carry out a credit check without your permission and applying will not impact your credit score. When homeowner loans are approved, the entire process can take around 2 to 4 weeks or sooner if you have your information readily available.