Homeowner Loans | Compare Rates With ABC Finance
Get A Homeowner Loan Without High Broker Fees
Take out a homeowner loan with ABC Finance and save thousands with our fixed £1,495 broker fee.
Over 30,000 loan-seekers helped
FCA Authorised – Fully regulated
Receive your funds in as little as days
Market-leading interest rates
CeMAP Qualified Advisors
Fixed £1,495 Broker Fees
Author: Gary Hemming CeMAP CeFA CeRGI CSP
20+ years experience in homeowner loans
What is a homeowner loan?
A secured homeowner loan is a type of finance that is secured against property and sits behind your existing mortgage.
Homeowner loans are also known as, home loans, a secured loan or a second charge mortgage.
They allow you to borrow a lump sum of money against the equity in either your home or a buy to let property.
Homeowner loans are popular because they allow you to borrow more than would be possible using an unsecured loan, with many lenders offering up to £250,000.
The amount you can borrow using a homeowner loan will depend on your property value, current mortgage balance, your income and your chosen lenders affordability criteria.
How do homeowner loans work?
Homeowner loans work much like any loan in that they allow you to borrow money in return for regular monthly repayments.
These loans allow you to borrow against the equity in your property, alongside your existing mortgage.They are a form of secured credit, meaning that the loan is secured by legal charge over your property, much like is the case with mortgages.
Secured loans, such as home loans and mortgages allow you to borrow at a lower interest rate than unsecured credit.
What can a homeowner loan be used for?
Homeowner loans can be used for almost any purpose.
They’re commonly used as debt consolidation loans to refinance existing debts such as credit cards, personal loans, store cards and any other types of finance. This allows you to simplify your monthly costs as you will only have to make one payment each month.
Using home improvement loans to give you the cash to refurbish your property is also very common.
Undertaking renovations such as redecoration, extensions, new kitchen and bathroom or a loft conversion can increase the value of your asset, allowing you to make a profit, which can ultimately offset your interest costs.
Who are homeowner loans suitable for?
They’re suitable for homeowners with existing mortgages, who would like to stay with their current lender or are tied in to a low interest rate, and are looking to capital raise. They could work for you if you:
- Are looking to raise funds
- Want an alternative to remortgaging
- Want to keep your repayments down through debt consolidation
Ultimately, deciding whether this is the right option for you will depend on a number of factors. Our team can offer advice and a free quote to help you make the right choice. Our number one goal is to ensure that both the advantages and risks are explained fully to ensure individuals make informed decisions.
Will I qualify for this type of lending?
In order to have your application approved, you will need to provide information to your lender, who will then make a decision based on the risk presented. They will typically look at the following:
- Your income and outgoings – to ensure you can afford the proposed monthly payment.
- Your credit rating – Your credit history is used to check your financial status and how you’ve managed the repayments on other debts.
- The value of your property – As your house acts as collateral for the loan.
The amount of equity you have – The value of your property, minus any existing charges.
How quickly will I receive the funds?
Homeowner loans can be completed quickly. We can complete an application and have the funds in your account in as little as 5 days, although most take around 3-4 weeks.
The time it takes for the money to hit your bank account will depend on whether a valuation of your property is required and how quickly you supply the required documents.
The application process is simple for home equity loans and our expert team can guide you to a quick completion.
What documents are required to take out a homeowner loan in the UK?
To apply for secured lending, the following will be required:
- An application form – The application form usually takes around 45 minutes to complete for most clients, although we can usually complete this with you over the phone in around 15 minutes.
- Proof of ID and address – This is usually covered with either a passport or driving licence and a recent utility bill.
- Proof of income – Most lenders require 3 months payslips or last 2 years tax return for self-employed borrowers.
- Bank statements – Most lenders require 3 months bank statements in order to verify your income and assess your account conduct.
- Your most recent mortgage statement – The most recent statement from your mortgage provider is used to verify your home equity and mortgage balance.
If you’re planning to use the funds for home improvements, a brief breakdown of them would also be helpful. As mentioned above, preparing these documents upfront when you apply will greatly speed up the process.
In almost all cases, your loan provider will require these documents at some point, so it will save time if you’re prepared when they request them.
How much does a homeowner loan cost?
The cost of a homeowner loan varies according to the amount of money you borrow, the loan repayment term, the interest rate charged and the cost of any arrangement fees that are added to the loan when it is set up.
Homeowner loan rates can either be a fixed rate or variable rate. Fixed rate loans mean that your monthly repayment will stay the same even if interest rates change in the wider market.
In addition to the interest charged, you may be faced with other costs. The most common ones are:
- Lender arrangement fee – Also known as a product fee. This is charged by the loan provider as part of their loan pricing. In most cases, this fee can be added to the loan.
- Broker fee – Almost all brokers charge a fee for their service. Most charge very high fees, often thousands of pounds, while we charge a fixed, low broker fee. In most cases, this fee can be added to the loan.
- Early repayment charge – Should you repay your loan within the first couple of years, you may have to pay an early repayment fee, or exit fee to the lender.
As Financial Conduct Authority regulated brokers, our job is to keep your loan costs as low as possible, so we’ll always work to find you the best possible deal.
What should I consider when choosing a homeowner loan?
Whether you’re using a homeowner loan as a debt consolidation loan or a home improvement loan, there are a few important things to consider.
When using secured borrowing to repay existing debts, carefully consider your chosen loan term. Should you choose to extend the term, while your monthly repayments will be lower, the total cost of borrowing (APRC) may increase.
Secondly, securing your loan against your property can put your property at risk of repossession should you fail to keep up your monthly repayments. For this reason, the long term affordability of the loan should be carefully considered. In all cases, the secured loan lender will assess affordability to vastly cut down the chances of the loan becoming unaffordable and check your ability to manage your expenses.
Finally, you should consider the impact of adding fees to your borrowing. Should you add various fees such as broker fees, lender arrangement fees and other charges, you will pay interest on them. This can significantly increase the total cost of your borrowing and mean you pay more interest.
Why choose ABC Finance?
At ABC Finance, we put our customers first – which is why our broker fees are on average £2,880 cheaper than some of our competitors. On a £35,000 loan, we charge a fixed £1,495 fee, while many others charge 12.5% of the loan amount - £4,375.
On top of the great value we offer, we’re fully Financial Conduct Authority (FCA) regulated and have been trading since the year 2000. We’re rated an average of 4.8 out of 5 across TrustPilot, Reviews.co.uk and Google reviews.
We work with lenders across the market so will compare homeowner loans and secure the best deal for your circumstances.
If you’re looking for low fees, market leading interest rates and great service from an experienced team, get in touch today.
Homeowner loan lenders
Homeowner loan lenders can be broken down into different types, much like other types of loans such as a mortgage or unsecured loan.
The key lender types for home loans are:
- Banks
- Challenger banks
- Specialist products from second charge loan lenders
Unlike the mortgage market, your choice of lender is more limited as there are less loan lenders in the market for loans secured against property. Leading lenders include United Trust Bank, Tandem Bank and Together Money.
What is the difference between a secured homeowner loan and an unsecured loan?
A homeowner loan differs from an unsecured loan in many ways. The key difference is that a homeowner loan is secured against a property, either your main residence or a buy to let property, while an unsecured loan is not.
As a homeowner loan is secured, it allows you to borrow money at a lower interest rate than unsecured lending. Home loans range from £5,000 to £250,000, while personal loans are usually available up to a maximum of £25,000.
Secured lending allows you to extend the loan term, usually up to a maximum of 25 years, which combined with lower interest rates, allow you to borrow money at a lower monthly cost.
Finally, as the lender has security for their loan (a property), it may be easier to borrow money if you have bad credit. This is because the lender will find it easier to get their money back in the event of default as they have a legal charge over the security property
What is the difference between a homeowner loan and a mortgage?
A homeowner loan is very similar to a mortgage, as they are both loans that are secured against the equity in a property.
While a mortgage can be used to purchase or refinance a property, a homeowner secured loan can only be used to release equity from them. Secured loans sit alongside mortgages, allowing you to borrow more money without having to repay your mortgage lender. This makes these loans an attractive loan type for those who have a good deal on their existing mortgage, but want to borrow more money with a new loan.
Frequently Asked Questions
How much could I borrow?
You can borrow anything from £5,000 to £250,000 with this type of loan.
The amount of money that you can borrow is dependent on your property value, mortgage balance, affordability, the loan term and how much money you need based on your needs.
To find out your maximum loan amount, how it compares to a mortgage and how you can pay lower interest, get in touch now. Save money with ABC Finance.
Will I qualify if I have bad credit?
Yes, you can still qualify for this type of borrowing even if you have a poor credit history, including defaults, CCJs, IVAs, use of payday loans, previous bankruptcy or historical mortgage or loan arrears.
We offer a specialist range of bad credit homeowner loans for this situation. Of course, those with a perfect credit score will have a higher chance of approval and access to lower homeowner loan interest rates.
I’ve been quoted a high broker fee, should I pay it?
While brokers play a vital role in the homeowner secured loan market, there is no need to pay a high broker fee to access finance.
Many homeowner loan brokers charge high fees, with some charging up to 12.5% of the loan amount, meaning £5,000 on a £40,000 loan. Should you choose to add this fee to the loan, you will significantly increase your monthly payments and end up paying interest on the fee, making it even more expensive.
At ABC Finance, we charge a low, fixed £1,495 broker fee and believe in improving access to finance for borrowers in the UK.
For this reason, we advise against paying high broker fees when taking out a loan.
Will getting a homeowner secured loan quote affect my credit score?
No, we can offer you a detailed quote based on your circumstances without impacting your credit score.
Should you choose to proceed with the quote, we would then conduct credit searches, which would show up on your credit report and could impact your score. Of course, we would not do this without first informing you.
How fast do homeowner secured loans complete and how do I complete quickly?
As mentioned above, this type of loan can be completed in as little as 5 days in the UK. While a loan can complete in 5 days, that doesn’t mean that every loan does.
When looking for a loan lender to lend you money, they will expect to be comfortable in your ability to repay it.
This means that you must supply certain documents to ensure that your lender can be sure that you fully meet the lenders homeowner loan criteria.
It important to have all your documentation in order, particularly those related to your credit history, mortgage, and income. A broker will often stress the importance of having a solid credit history when applying for secured loans since a good credit score can help you secure a lower interest rate on your homeowner loan.
Additionally, a broker can guide you through the process, ensuring that you meet all the requirements to borrow the funds quickly.
The faster you provide the necessary documentation, the quicker your homeowner loan can be processed, potentially securing you the best interest rates and terms from the lender.
While credit does impact your ability to borrow and the rate charged, we can still arrange loans for those with bad credit, or very little credit.
Read more – Why not try our online homeowner loan calculator
What documents will I have to provide?
To apply for a homeowner loan in the UK, you must provide the following:
- Proof of income (to ensure you can afford the monthly loan payments)
- Bank statements (to check account conduct and verify your outgoings)
- Proof of ID and proof of address
- Details of your current mortgage
All homeowner loans are different and each lender has their own methods of assessing applications.
As such, you may be asked for slightly different information depending on your circumstances, how much money you need, your current mortgage lender and your chosen loan provider.
Some lenders require less information, but those that offer lower rate loans tend to be more cautious in the approach.
When applying for a homeowner loan, it's important to remember that your credit history will play a significant role in the lender's decision, particularly because these secured loans are tied to your property.
Mortgage brokers often advise that borrowers with a good credit score might secure better interest rates on their mortgages or homeowner loans, while those with a poor credit history may find it more challenging to borrow at competitive loan rates.
Ensuring that your credit is in good standing before approaching a loan broker can increase your chances of securing a homeowner loan with a lower interest rate.
How much home equity do I need to take out this type of loan?
To borrow using this type of loan, you need at least 5% equity after any outstanding mortgages and loans are taken into account.
This means that the maximum loan to value (LTV) is 95% including the new loan and your existing mortgage. Lower LTV applications will open up the lowest rate options and allow you to take out credit at a lower cost.
Watch our explainer video
Homeowner loans are secured against your property. Before you apply for a secured loan, be aware that your home is used as security. This means your home may be at risk if you fall behind with your secured loan or mortgage repayments.
Remember, if you consolidate your existing borrowing, you may be extending the term and increasing the amount you repay in total.
