Using your home to get a competitive loan
With a choice of financial solutions available to those that want to borrow money it is important to consider what your best option is before you make a financial commitment such as a loan. For people living with friends, family, or in rented accommodation the choice are more limited, as only unsecured finance is available. This means that as a non-homeowner you would only be able to get an unsecured loan, which means reduced borrowing power, shorter repayment periods, and the need to have good credit.
Those who do own their own homes can enjoy far more flexibility and financial leverage when it comes to borrowing money, and this is because of the availability of secured loans, which are loans that are secured against the equity in the home. If you have a good credit rating, then you will find that you are eligible for both secured and unsecured loans, which means that you can choose to take out a loan based on contract if you wish, or if you prefer you can use your home in order to get an affordable loan. If you are a homeowner with bad credit then you will most likely be unable to get an unsecured loan, but you have a good chance of getting a secured loan if you use the equity in your home to raise the finance that you need.
Many homeowners these days decide to use the equity in their homes to get finance, and this method of raising finance has become particularly popular over recent years since property prices started to rise and equity levels went through the roof. This has given homeowners far more flexibility when it comes to getting finance, enabling them to enjoy the many benefits of using their home to get finance. This includes greater borrowing power, longer repayment periods, and competitive rates of interest.
Secured loans are available from a wide range of lenders, so homeowners will not be short of choice when it comes to finding the most suitable loan. You can enjoy some very competitive deals at present, and with interest rates coming down you could find that there are increasingly lower rates coming onto the market, which means lower repayments and lower interest charges. You can further keep the repayments on your secured loan down by making sure that you take the loan out over a longer term.
You do, of course, also need to consider the risks of using your home to get finance. This includes the risk of falling into negative equity if property values fall, leaving you owing more on your home than it is actually worth, and the risk of losing your home if you fail to keep up with repayments on your secured loan. You should make sure that you can comfortably keep up with repayments on your loan before you make any commitment to reduce the risk of falling behind with repayments.
15th February 2008
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