Home Secured Loans
Things to think about when applying for a home loan
Home secured loans – usually called homeowner loans – offer good interest rates and lengthy repayment periods, but it's important to know your way around the jargon. Most such loans are offered at variable interest rates and are based on the equity in your property.
Home secured loans, usually described as homeowner loans, are loans secured against your property. Interest rates are usually very low, but you'll often find that home secured loans have a variable APR – which means if interest rates rise, so will your repayments. If you're borrowing a large sum over a long period of time, you'll find that few lenders will offer loans at fixed interest rates.
Home secured loans are based on equity, which is the difference between the value of your home and the outstanding balance of your mortgage. Lenders then calculate the maximum borrowing amount using a figure called LTV, which means loan to value: a 90% LTV means the lender will offer up to 90% of the equity in your property. If your home is worth £100,000 and you have £75,000 outstanding on your mortgage, your equity is £25,000; at 90% LTV the most you'll be able to borrow is £22,500.
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