Homeowner Loan Lending Criteria
What Are The Lending Criteria For Homeowner Loans?
Find out the key lending criteria that a lender will expect you to meet when you take out a home loan
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Author: Gary Hemming CeMAP CeFA CeRGI CSP
20+ years experience in homeowner loans
While each lender has their own lending criteria, there are general rules that act as a guide to whether you’ll meet the criteria for a homeowner loan.
The one rule that must be met is that an asset, such as your home or an investment property, must be used as collateral and have sufficient equity.
Before you apply for a homeowner loan, read on to find out whether you’ll meet the required lending criteria.
Finally, don’t panic, if you don’t meet every requirement. That doesn’t mean we can’t help you get that loan you need.
Working with ABC Finance
We pride ourselves on making the process of applying for a homeowner loan as simple as possible for our clients. ABC Finance Ltd, as a leading homeowner loan broker, will walk you through every step to ensure you’re making the right decision in terms of product and lender and securing the best possible homeowner loan rates.
The process
| 1 | Get in touch with us by either filling out an enquiry form on our website or calling us on 01922 620008 for a no-obligation conversation with a homeowner loan expert. We will talk through your circumstances and needs before offering initial terms at the lowest rate available to you. |
| 2 | We will send out a decision in principle within two hours outlining the terms available from the best homeowner loan deal including any fees and charges that may be payable. Before issuing terms we always fully check your circumstances against lender criteria to give your application the best possible chance of success. |
| 3 | Once you are happy with the terms and understand exactly how the product works we will start the application with the lender. We help with any paperwork and let you know exactly what information or documents we will need. Once we have packaged this together, your application is submitted to the lender for approval. |
| 4 | Your property valuation is completed, typically using a desktop valuation. If this, and the submitted documents are approved, your loan offer is issued. This must be checked, signed and returned to the lender. |
| 5 | Once this work’s done you are free to draw down on your homeowner secured loan and complete your property transaction/refinance. |
What checks can you expect when you apply for a homeowner loan?
Here are the key checks you can expect when you apply for a homeowner loan:
- Affordability – Your chosen lender will want to ensure that your new loan is affordable. Beyond this, each lender has set affordability criteria that must be met.
- Property value & equity – As the lender’s security for the loan is your property, they will want to ensure that the property value is what you say it is and that you have sufficient equity. This is checked through a valuation report – usually completed online, although rarely a physical valuation may be required.
- Credit score & history – Your credit score will impact the homeowner loan offers you’re eligible for. While a good credit history will increase your chances of being approved, bad credit won’t necessarily prevent you from getting a loan.
The criteria
Here is a quick breakdown of the criteria for homeowner loans
Loan sizes
Homeowner secured loan lenders allow you to borrow anything from £10,000 to £500,000 (or even more in some cases).
Read more:
- Homeowner loans in England
- Homeowner loans in Scotland
- Homeowner loans in Wales
- Homeowner loans in Northern Ireland
Loan term
Most lenders offer a loan term between 5-25 years, this is known as your loan term. Some lenders are happy to offer loans up to 30 years.
Homeowner loans allow you to borrow over a longer term than is possible using an unsecured loan. If you opt for a capital repayment loan, a longer loan term will reduce your monthly repayments, but does mean you’ll pay more interest overall.
Conversely, with a capital repayment loan, a shorter term will increase your monthly repayments, but reduce the total cost of your loan.
If you’re unsure which term is best for you, your homeowner loan broker will be able to discuss this and help you to find the perfect balance.
Credit history
We can consider almost any credit history profile and even offer a range of bad credit homeowner loans.
Previous credit problems such as CCJs, defaults, IVA or previous bankruptcy can be considered. We can also consider applications from borrowers with previous mortgage arrears. Current mortgage arrears tend to cause issues as in most cases, a current first charge mortgage lender will be reluctant to grant consent to a second charge when there are current arrears.
Acceptable applicants
We can consider almost any applicant if they own a UK property.
We can offer a range of specialist loans for a range of applicants such as homeowner loans for self-employed borrowers, joint homeowner loans, buy to let homeowner loans and fixed rate homeowner loans.
Use of funds
Almost any use of funds is acceptable. Again, we offer a range of loans including:
Homeowner loans for business purposes
