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How much can I borrow?
A secured homeowner loan is a very effective choice for those looking to borrow money, as you can often borrow far more than you would be able to borrow with an unsecured loan.
Homeowner loans are, of course, only available to you if you own your own home. If you do own your own property and are therefore eligible for this type of loan, you can look forward to some very competitive deals and an array of benefits.
How much you can borrow with a secured loan will be based on:
- How much equity is available in your property?
- How much can you afford to repay?
- What is your credit rating?
Why choose a secured loan?
There are many reasons why people with their own homes opt for a secured homeowner loan rather than an unsecured loan. Because the loan is secured against an asset (i.e. the home) lenders are more lenient with who they will lend to, and even those with poor credit stand a good chance of getting a secured loan compared to the chances of getting an unsecured one.
One of the main reasons people opt for this type of loan is the borrowing power – companies offering homeowner loans can offer far greater borrowing power than unsecured lenders, but this is based on a number of factors.
Longer repayment periods are another reasons why these loans are popular – because the loan is spread over a longer period you can keep monthly repayments down.
How much can I borrow?
When it comes to working out how much you can borrow lenders will take a number of factors into account.
Your personal circumstances, such as your credit rating and your employment status, will be taken into account.
The lender will also look at your income and outgoings to determine how much you can afford to borrow and repay.
And, somewhat most importantly, the main deciding factor is the amount of equity available in your home to borrow. Because the loan is secured against your home, you can only borrow as much money as is in your property.
Borrowing your equity...
In general, a secured homeowner loan is secured against the equity in your home, which means the market value of your home minus any other secured loans or mortgage outstanding on it. The figure that you are left with is your equity.
Lenders' criteria can vary, and some will allow you to borrow up to the full amount of your equity, whereas others will allow you to borrow up to a certain percentage of your equity. Some will even let you borrow over and above the amount of equity you have in your home.
It is vital that you remember that a secured homeowner loan is secured against your home, and failure to keep up with your repayments will mean the possibility of losing your home. You should therefore ensure that the amount that you borrow is based on the amount that you can afford to repay on a monthly basis.
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