Secured loans are a popular form of borrowing because they usually offer competitive interest rates and long repayment periods. This will leave many people wondering whether they are eligible or not. Fortunately, secured loans are not exclusively available to those with excellent credit history and who own a very valuable property.
To be eligible for a secured loan, you need to be a homeowner with an existing mortgage. The whole point of this type of borrowing is that the lender has the security of your home if you fail to make the necessary repayments, so this is essential. If you jointly own the property, then you’ll have to make a joint application, which is also true if you’re married.
Lenders want to know that you can afford the repayments, which is why being in employment is also very important. The amount of your wage is also likely to impact the overall amount you are able to borrow. Those who are self-employed may find it difficult to get a loan but some secured lenders offer loans to self-employed borrowers.
The house you own also plays a part in a secured loan. Many lenders will have a minimum property value with which you can secure a loan against. This is to ensure that they will receive something of sufficient value if you default on the loan. Often this minimum is around £80,000 which the majority of UK homes fall [over?]. The more the house is worth, the more you’ll be able to borrow, and potentially the lower your interest will be.
The final thing to think about is what the loan is being used for. Many lenders are very wary of money which is going to be used for business purposes, and as such they will not lend to those looking to use it for this. Similarly, you can’t usually use the money to fund the purchase of a new property. It’s always best to ask the lender before making an application, so that you know where you stand.
Secured homeowner loans are very useful for a variety of large purchases, and more people are likely to be eligible than you might think. You should bear in mind that borrowing over a longer term will increase the amount you repay overall, but if you’re looking for a competitive interest rate and a long time in which you can pay off the loan, then this could be something to consider. Click here to find out more information.
