Homeowner Loan Comparison
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Homeowner Loan Comparison
* Your home could be repossessed if you do not keep up with repayments
What is a homeowner loan?
A home owner loan is a type of personal loan that is secured against a house or property which you own. This essentially means that you are securing the loan against your property in the event you are unable to meet your repayments. If you are not able to meet your repayments then the lender will be able to seize and sell your property to recover the loan.
Having a property to secure a personal loan against can be a great asset as it means that lenders will be more willing to offer you a loan based on the security of your property value.
How does a homeowner loan work?
To get a homeowner loan you must first own a property and be willing to offer it as a collateral for the loan should you be unable to repay it. You will need to produce evidence of property ownership, proof of income, and any debts you currently owe. Your credit history will also likely be assessed by potential lenders to check your repayment history and behaviour.
The lender will evaluate your financial situation based on the information given and will determine your possible maximum loan amount.
Once you have agreed to the loan amount as well as the interest rate and repayment period you (the borrower) will receive the loan. You will then be required to make monthly repayments to the lender which will include interest. You will continue to make these repayments until the loan is repaid in full. If you are not able to make these repayments your property may be seized to recover the loses.
What are the benefits of a homeowner loan?
Homeowners who take out a secured loan on their home can enjoy the following benefits.
- You may have lower interest rates
- Access to larger loan amounts because of your house value
- If you’re using the loan for home improvement you may receive some tax benefits
Obviously these benefits can be achieved through other loan products but what’s right for you really comes down to your own personal financial situation and your long term goals.
Is a homeowner loan the same as a mortgage?
Homeowner loans and mortgages and similar in the sense that they are both loans secured against a property. However they differ in one major key respect which is what they are used to purchase. A mortgage is a secured loan that is used to purchase a property, typically the one in which the mortgage is being used to purchase. A homeowner loan is used typically for things like home renovations or improvements or debt consolidation.
How long does it take to get a homeowner loan?
Typically there are a number of steps that will need to be satisfied before you can be given a home owner loan by a lender. This can result in the application process taking anywhere from a few weeks to a few months, it really depends on how much of the relevant information you have on hand for your application.
- Prequalification – This can be completed in a few hours and done typically by submitting some basic financial information to the lender to assess your suitability for a homeowner loan.
- Official Application – next you will be invited to make a an official application with more detailed information around your financial situation. This can include your income, debt, credit score and history along with other assets you may own.
- Underwriting – This is when the lender will examine all you financial information and make a decision on your loan based on this information.
- Loan Approval – This is where the lender will make an offer and you the borrower will have time to review and accept or decline it.
- Closing – This is where you sign the legal documents around accepting your loan and it’s repayment details. Once complete the lender will distribute the funds to you for the loan and you will begin making repayments at the agreed date.