Article - finance
Secured loans for homeowners: because home provides more than living space
by Marsha Claire
Secured loans for homeowners are also called mortgages. They are loans that are backed by a collateral. A Secured
loan for Home Owners is offered against the guarantee of your home or any concrete property. It enables you to get
loans according to your needs and also get good deals for easy repayment.
They basically mean that if you are a home owner, you can borrow money from a recognized lender offering your
property as security against the loan. Their popularity is escalating. Secured loans for homeowners have always
been made available at low interest rates.
They are forever bettering their own record in terms of interest rates.
The whole perception of the world in the past few years has changed. It allows us to see and capture things that
have not been possible in the past. Borrowing money is no longer considered taboo and therefore applying for a loan
is a preferred way to sort out our financial troubles.
Loans have become accessible and by applying for a secured loan, we can avail of benefits like:
Lower monthly repayments than unsecured loans
The ability to borrow more money
Spread repayments over a longer period of time
Home equity is the value of the home that it may fetch, when sold. Thus, equity shows the market value of the home.
By taking a secured loan, one can use this equity. Using equity does not mean selling the home. It is because of
the equity that borrowers get the best terms on secured loans. Secured Loans for Home Owners is based on the equity
worth of the property and is the preferred loan choice of majority of lenders (and home owners!). This choice
offers cheaper interest rates and will be more flexible if the credit track record of the borrower is a bit dodgy.
All because you own a property, you can use it as a guarantee, should anything go wrong with your repayments.
There is more scope to borrow larger amounts of money when it is secured against your home, as long as you are able
to satisfy the lender of your ability to repay the loan. The amount of money you can borrow over a given term
depends on a number of factors, including the amount of equity remaining in your home and your apparent ability to
repay the loan. So it pays to spend time finding the right loan from a company you are happy with.
Offering the home as collateral does not cease the rights of the borrower as the owner of the home. Though the
lender holds the ownership rights to the home, these are exercisable only when the borrower does not repay the
entire amount of the loan. The borrower stays in the home and even regains the rights when the final instalment to
the loan is paid.
These days, secured loans for home owners are available with a wide selection of flexible repayment plans, making
it easy to 'tailor' your loan payments to suit your own personal finances. In the event that you should fail to
keep up the required payments on your secured loan, the lender has the right to ask the courts to enforce the sale
of your home in order to recoup the remaining debt incurred. However, repossession of your property by the lender
of your secured loan due to failure to meet repayments is the worst-case scenario.
Many people with a bad credit history think that they will not be able to get a secured loan, but any home owner
that can offer property as security against a loan should not have a problem.
The best attraction of secured loans for home owners is, simply, that it is secured. And because it is a secured
loan, it is cheaper. Compare it with your bank or credit card loans, and you might be in for a shock! Secured loans
for home owners are credited by offering the lowest interest rates. Interest being a function of risk is lesser in
case of secured loans. This is the most important aspect of loan. The result is that you have more money for other
things each month, money that would otherwise have gone to financial institutions in the form of interest. This
type of secured loan allows you to spend the money on anything you choose, from that much-needed vacation, to home
improvements, to consolidating other more expensive loans.
The most preferred loans are those that are offered with sufficient backing. Many lenders look more favourably on
people who are home owners as this demonstrates a commitment to repay a large amount of money over a long period.
Because these loans are secured by the equity of the property, there is less risk to the lender and the interest
rates are lower. They are a smart way to go!!