Tag Archives: equity
Reasons to Obtain a Home Loan
Purchasing your first home can seem like a very daunting process. There are so many things to think about when it comes to obtaining a home loan that many people are quite unsure of what will be required of them. Some people even worry that they will not be able to get the best deal possible on a home loan simply because they do not have enough knowledge of the subject. However, obtaining a home loan can be one of the most productive and successful things in individual couple can do in their lifetime. If you are wondering whether or not you should purchase a property you may be interested to learn a few reasons to obtain a home loan.
When you obtain a loan to buy a property you will then own your own home. For many people this brings about a sense of security and happiness that they have never experienced before. Owning your own home means that you have somewhere to call your own that you can then decorate and alter to reflect your own personality.
Couples want to obtain a home loan so that they can start their life together and think about starting a family.
Owning your own property also brings about more financial stability, something which a lot of people do not have until they move into the first house they buy.
Once you have purchased a property using a home loan you will then have an amount of equity within that property. This means that in the future you could borrow against that equity or extend your loan in order to improve the property even further. This is something that individuals without home loans are unable to do as they do not have any equity on which to borrow against.
Once an individual or couple have obtained their first home loan they can then go on to obtain further loans for bigger properties, should the need arise. It is these first steps on to the property ladder that can make all the difference for the future.
Owning your own home means that you no longer have to pay out money every month in rent to a landlord. Many people find that paying rent feels like dead money as they will not receive anything back in return. Home loans on the other hand actually provide lenders with a sound investment for the future.
In certain cases some people will even buy properties in order to make money on them. In this way obtaining a home loan is a sound business move and can help an individual to build up a portfolio of properties that they buy and renovate and then sell.
Of course there are more reasons why an individual or couple would want to obtain a home loan, and these are just a few of them. Owning your own property is one of the biggest steps a person can take, but also one of the most rewarding and satisfying.
The pros and cons of secured loan UK
The whole concept of secured loan in UK revolves round collateral. Collateral is a technical term which means the property that is used as security in a loan. Any property of significant money value has acceptance as collateral. However, in UK a home is most frequently used as collateral. Though secured loans in UK are offered against the equity available in a home, in special cases no or zero equity is also accepted.
Some people find it risky to take loans against their home. Being aware of the fact that they will have to lose their property if they fail to pay off the loan, they shrink back from taking secured loans. It cannot be denied that there is risk of property repossession in this type of loan. Yet, all people do not avoid taking them. Rather, plenty of people think of it as a cost-effective method of raising fund. In fact, there are genuine reasons behind the popularity of secured loans in UK.
First of all, it is a gainful bargain for the borrower. He gets the chance to undertake a major financial venture as this loan allows him to take out a hefty amount of money. He has the leverage to borrow as much as his home equity lets him to. Even in some cases he can borrow more than his home equity allows. There are lenders who sanctions loan amount of up to 125% LTV.
Besides, secured loans UK offer high level of flexibility in repayment terms. Longer duration of time to repay the loan, low APR, smaller monthly instalments are all awarded to the borrower. This is done as reciprocation to the gesture he shows by offering collateral. Moreover, the lender also gets the freedom to use the amount advanced by personal secured loan UK for a plethora of personal needs. So far the risk factor is concerned; all the flexibilities mentioned here are enough to back the borrower to easefully pay off the loan and avoid property repossession.