A homeowner loan can provide the perfect solution when you are struggling to meet several payments every month. You may be repaying a credit card balance, car payments, tuition fees; in fact most people are paying for several different things each month. This can be consolidated into one monthly payment by taking out a home owner loan and paying off these debts so that only the loan repayments must be made each month.
Who Is Eligible for a Home Owner Loan?
Home owner loans are available to anyone who owns their own home; either outright or partly paid for. The amount available will depend upon your equity; that is to say the difference between the total value of your home and the outstanding mortgage yet to pay. For example if the house is valued at £150,000 and you still owe a mortgage of £90,000, then your equity is £60,000 and this is the number that the bank or a loan company will use to calculate the total they will lend you.
How Much Can I Borrow and What Will the Repayments Be?
The equity on your property will designate the maximum you will be allowed to borrow, but be careful not to ask for more than you actually need. First add up the total that you need to repay on your various debts and decide the minimum that you need to cover all of these and consolidate them into one monthly payment.
Next you must decide exactly how much you can comfortably afford to pay back each month and do not sign up for anything that you will struggle to pay, as you will be in danger of losing your home. A home owner loan is also called a second mortgage and the risks involved are raised with each new loan; so while the loan will be an easier way to make your monthly payments, you must be very careful not to sign up for more than you can afford to repay.
You must then discuss with the bank or loan company, exactly how much you need and can afford to pay each month, and then come to an agreement that suits both parties. Interest rates will vary according to your equity, credit rating, and ability to repay, as well as differing greatly from one company to another so you should also look into a few options before signing any papers. A poor credit history, arrears, or County Court Judgments will not necessarily exclude you from a home owner loan, but will probably raise interest rates.
For anyone wishing to consolidate a number of monthly bills into one payment, or maybe just needing a little ready cash for a purchase like a new car; a home owner loan may be the ideal answer. This is particularly true for those with large equity and a good credit history, who will be able to borrow at reasonable interest rates and pay back with easily affordable monthly payments.