If you own your own home then you may not realise it but it
could help you get a great deal on a personal loan - and it
could save you a lot of money in the process. It doesn't matter
what you want the money for - if you're prepared to use the
property you own (even if you only own it by virtue of your
mortgage!) then you can access some of the best loan interest
rates in the sector.
As a homeowner you will qualify for a secured loan rather than
an unsecured one. In simple terms all this means is that you can
use your property as a guarantee against the money you borrow.
So, you agree with your lender that you will borrow the money
you want. You agree to make your repayments according to your
loan schedule for as long as it is set to last. And, you agree
that they can use your property to get their money back if you
stop making your repayments as you should.
As you can see this is a great win-win situation for your lender
- but it's a fantastic win-win situation for you too. The fact
that you are willingly giving your lender this kind of security
means that they will give you preferential interest rates in
return. So, you could find yourself saving an awful lot of money
both in your regular repayments and in the money you pay back
overall. This could run into hundreds or thousands of pounds
depending on how much you want to borrow. You'll also find that
you can borrow far greater sums with this kind of loan than with
an unsecured option.
There's no reason to be worried here - even though you do
technically risk your home with this kind of arrangement - as
long as you are sensible. For example, you shouldn't borrow more
money than you can comfortably repay. You certainly shouldn't
use this kind of loan to shore up leaky finances unless you KNOW
that you can meet your repayments. And, you should look at
payment protection insurance as a back-up if you have any
worries left at all. This way your repayments will be covered by
your policy if you get into unforeseen difficulties during the
term of your loan period.
If you are being sensible about all this then you'll also
realise that a reputable lender won't want to repossess your
home at the drop of a hat or at the first sign of trouble. The
majority of lenders will help you as much as they can as long as
you let them know what's going on if you do happen to get into
trouble with loan repayments. For most of them legal action is
actually a real last resort. All this should go some way to
making you feel better about using your home to raise finance.
The rates you'll undoubtedly get will make you feel even better
- especially if you shop around for the best deal you can get.
About the author:
This article was written by Gary Tallon, a writer of over ten
years experience in finance and the
homeowner loans
industry.
