Secured Loans for UK Homeowners

Is a homeowner loan a good idea?

Secured homeowner loans are mainly used for home improvements and debt consolidation. Since homeowner loans are usually cheaper (and longer term) than unsecured loans or credit cards they are definitely a good idea if used for these purposes because:

1. Home improvements may add value to your home and so it makes sense to take out low cost long term borrowing. The cost of your secured borrowing should be more than offset by the increase in your house value plus your enjoyment of living there!

2. If you have expensive unsecured debt, such as personal loans or credit cards, you should be able to save interest costs by consolidating these accounts into a single secured homeowner loan. Many people prefer to have one monthly payment rather than many small payments that you need to pay on different dates. Refinancing unsecured debt should enable homeowners to take control of their finances and save money!

What should I look out for when taking out a secured homeowner loan?

Always look at the loan term, interest rate and monthly payment. Remember that your home is at risk and you should budget carefully. The lender will conduct a thorough affordability assessment but they cannot know your personal finances as well as you do!

Check whether the interest rate is fixed or variable. You do not want to be caught out by an unexpected increase in interest rates and hence an increased monthly payment. Star Loans only offers fixed rate loans which gives borrowers certainty in their financial planning.

Assess any fees and charges. Whilst a credit broker may find you a great deal, remember that a commission of up to 10% may be charged! Look at costs associated with missed payments or early settlement. Star Loans only charges fees to cover administration costs and are therefore kept as low as possible….they are not a profit centre!

• How flexible is the secured loan?
• Can I take a payment holiday?
• Can I borrow more?

Star Loans offers flexible loans and is always happy to speak to customers and find a suitable arrangement.

Who are homeowner loans suitable for?

Homeowners with a first mortgage can apply for a homeowner loan providing they have sufficient equity in their property. Equity is the difference between your home’s value and your secured borrowings, such as your mortgage. So if your home is valued at £200,000 and you have a £100,000 first mortgage, you have equity of £100,000. Since most lenders will lend up to 80% of your home’s value, this means you can borrow an extra £60,000!

Lenders have a regulatory duty to ensure that your loan is suitable for your financial and personal circumstances. Unless you can demonstrate sufficient income to afford repayments on a sustainable basis they cannot lend to you! Borrowers will always be asked for payslips to prove income. Homeowner loans are therefore suitable for borrowers with steady predictable income which comfortably exceeds outgoings.

Who are homeowner loans suitable for?

Homeowners with a first mortgage can apply for a homeowner loan providing they have sufficient equity in their property. Equity is the difference between your home’s value and your secured borrowings, such as your mortgage. So if your home is valued at £200,000 and you have a £100,000 first mortgage, you have equity of £100,000. Since most lenders will lend up to 80% of your home’s value, this means you can borrow an extra £60,000!

Lenders have a regulatory duty to ensure that your loan is suitable for your financial and personal circumstances. Unless you can demonstrate sufficient income to afford repayments on a sustainable basis they cannot lend to you! Borrowers will always be asked for payslips to prove income. Homeowner loans are therefore suitable for borrowers with steady predictable income which comfortably exceeds outgoings.