A secured homeowner loan is also known as second charge mortgages. It is a kind of loan obtained by a second charge on an already mortgaged property. In our common parlance, a home loan is a loan given to the owner of a home. It is not borrower's original mortgage, rather an extra loan that enables you to ask for money based on the equity of your home.
Based on the risk factor, a secured personal loan is comparatively easier to obtain than an unsecured personal loan because the loan has been given to the borrower against his home equity. Therefore, the lender feels it secure to give money against your home. The lender will be legally empowered to take away your property if you fail to pay back in time as agreed upon during the time of payment.
Obviously, the Secured homowner loans are cheaper in contrast to the unsecured personal loans. The rate of interest for this kind of personal loan is very low with smart terms and conditions. Depending upon the factors like amount of money, time period and personal details, the secured homeowner loans are usually obtainable for sums of between £3,000 and £150,000. The length of time ranges from three to twenty-five years. However, there are no hard and fast rules to fix the amount. The lender is allowed to give any amount. It all depends upon the credibility and trustfulness of the borrower. Even some lenders are lending as much as 125 percent of the equity; however, it happens in case with relatively low value properties.
Pros of secured personal homeowner loan
Any kind of borrowing is not advisable. However, sometimes we are forced to borrow due to certain factors like social obligation, personal requirement, education of the children etc. Since, a number of lenders are ready to pay you a secured loan, you must have a clear-cut idea on the pros and cons of secured personal homeowner loan.
Pros
The greatest advantage of personal homeowner loan is that it is cheap (low rate of interest).
You will also get sufficient time to pay back the amount you have borrowed.
In some cases, affordable monthly installment system is arranged for homeowner loans.
Cons
Just remember, borrowed money is not free money. There is a chance of loss of ownership if you fail to repay the money.
It may induce you to spend more since the interest rate is low.
The borrower must be rational first. He or she must invest the borrowed money in some business, in family needs, education of children even reconstruction of home. As a borrower, you should keep detailed information of the lender and his credibility before going for a secured homeowner loan.
by Steve C Clark
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