Tuesday, March 20, 2007

Home loan– Invest in your dream

A secured home loan is granted against collateral. These loans are offered against the borrowers' home which act as a security against the lending amount. The loan amount can range from £25,000 to £1,000,000. The loan period is also pretty extensive and can stretch from 5 to 25 years.

Borrowers can borrow up to 25 percent more than the value of their home if they are going in for a second mortgage. For example, if your house is worth £150,000 and you owe £150,000 on mortgage payment, this loan programme would allow you to borrow £25,000 over and above the loan amount.

There are many lenders who offer a 125 percent equity home loan. By and large, this is a credit score driven loan programme. But it is quite possible that each lender will have its own terms and guidelines. Borrowers have to have a decent credit score in order to qualify for this loan type. Additionally, borrower's financial record will determine the maximum loan amount he may qualify for and the maximum cash in hand you may receive. On top of that, a number of home loan lenders may require seasoning on the length of time the borrower has lived in the house. The minimum time is presently gauged at three months.

As far as property appraisal is concerned, most 125 percent home equity loan lenders do not require you to obtain one. Usually, they use the purchase price of your home as the value if you have lived in your residence for 12 months or less. If you have lived in your home for over 12 months, a recent tax assessment, simple drive-by appraisal, or automated value model (AVM) can be used. An AVM is a computer generated assessment of your home's value which is based on recent home sales of comparable houses in your neighbourhood.

A host of advantages are attached with secured home loans:

* As these loan deals are offered against a security which covers the risk factors, it is possible to get it at a low interest rate.
* Repayments terms and conditions are quite flexible and thereby adds to its appeal.
* Easy availability of these loans has made them popular among borrowers. These loans can be applied for through the internet as well.

It is really up to the borrower to see if this loan type is feasible for him or not.

Summary: Everyone dreams of getting a foothold in the property ladder. If you are a homeowner and a UK resident, then you have a lot of options in front of you. Depending on your personal circumstances and the amount of money you need, you can avail a secured or an unsecured loan.