Homeowner Loans
Representative Example: Amount of credit: £500 for 12 months at £79.09 per month. Total amount repayable of £949.08. Interest: £449.08. Interest rate: 140% p.a. fixed*. 278% APR Representative. Rates between 9.9% APR and 1295% APR.
Homeowner loans allows you to borrow £1,000 to £1 million using your home or property as collateral. You will need to own the property outright or have a mortgage with a lot of equity (so you own most of the house).
People will use homeowner loans to pay off debts, fund home improvements or to make large purchases. They are typically added on top of your existing mortgage so are classified as secured loans or second charge loans. Failing to keep up with repayments could put your home at risk of repossession as the lender will need to sell your home to recover the debt.
Get a free quote for a homeowner loan with Badger Loans today. Start by entering your details and you will receive a provisional quote online. If successful, you can receive your funds within 1 to 3 weeks of applying.
Key Features
- Borrow £1,000 to £1,000,000
- Repaid over 5 to 20 years
- Rates from 5% APRC
- Houses, flats, cottages, bungalows accepted
- Must own property or have chunk of equity
- Failing to pay could lead to repossession
Eligibility Criteria for Homeowner Loans
- Must be a homeowner
- Must be the owner of the property
- Must own the property outright or have a large chunk of equity
- No existing second mortgages
- No recent bankruptcy
Types of Homeowner Loans
Business Loans: You can borrow money against your home for business purposes. This could be for starting a business or to help grow an existing company. It is a high risk strategy, since falling behind on payments can lead to your home being repossessed. However, this method has been used by many successful entrepreneurs in the past including the founders of McDonalds and Ring.com.
Home Improvement Loans: If you are looking to add an extension to your home or revamp your bathroom or kitchens, you can borrow money secured against your home. You can borrow for the duration of the renovations and any improvements can potentially boost the value of your home.
Second Charge Mortgages: Homeowner loans are usually the second priority to be paid after your mortgage, hence they are commonly referred to as ‘second charge mortgages’ or ‘second charge loans.’ The amount you can borrow is typically less than your original mortgage because it is now the second in line to be paid.
Secured Loans: Any loans that are secured against your home will help you borrow based on the value of the property and how much equity you have in it (or whether you own it outright). Since the loan is secured, you are able to extract its value to borrow money, but your property could be at risk of repossession if you cannot keep up with repayments.
Using Homeowner Loans for Debt Consolidation
Households will use homeowner loans to consolidate their existing debts for credit cards, loans and other financial liabilities. This allows the customer to put all their outstanding debts into one single loan secured against their home – so they can receive money upfront, pay off their debts and then just pay back one source in monthly repayments. See debt consolidation loans for more information.
Are Homeowner Loans Used for Bad Credit Customers?
Not always, some people use homeowner loans to consolidate their debts or borrow extra money for a large purchase like a new car, wedding or kitchen renovation.
However, those homeowners who are struggling to keep up with payments and have a poor credit score may be struggling to get an unsecured loan or other type of borrowing. If they have a valuable asset such as their home, they can usually borrow money against it and often withdraw quite large amounts.
What Information Do I Need to Apply for a Homeowner Loan?
Basic information: Your name, address, loan amount, monthly income, expenses and bank details
House information: Estimated house value, outstanding mortgage and equity you have in the property. You will also need to provide proof of ownership and may need to provide recent utility bills.
Valuation: If you proceed, the lender will require a property valuation by a chartered surveyor to confirm the existing value of your home and check for things like subsidence and any things that could affect the long-term value.
What are the Risks of Applying for a Homeowner Loan?
Your loan is secured against your property when you live and if you are unable to keep up with repayments, the lender will have to repossess your home and sell it on the open market to recover the money they lent out to you.
The greatest risk of using a homeowner loan is that if you fall behind on payments, it could leave you homeless. However, rest assured, the lender will seek other ways to collect their repayments before repossession and usually contact you by email, phone and send letters before looking to repossess your property.
Are There Any Extra Fees Involved?
Yes, when you apply for a homeowner loan, you may incur valuation fees (£400 to £1,000 depending on the size of your home), broker fees (1-2% of loan value) and legal fees (depending on whether you require a solicitor).
Depending on which lender you are paired with, the fees may vary and these may be required upfront or added into the total loan amount.
At Badger Loans, we work with a panel of our 30 homeowner lenders and can help you find the best rates and terms to suit your requirements. Our entire application is completed online and there are no upfront fees and no obligation when you apply. We will pair your application with the lender who is best suited for you and most likely to accept you – and you can get a free quote in just 5 minutes.
