Homeowner Loans England
How To Get A Homeowner Loan In England
Get the best deal on your homeowner loan in England with ABC Finance and save thousands in broker fees!
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Author: Gary Hemming CeMAP CeFA CeRGI CSP
20+ years experience in homeowner loans
A homeowner loan allows you to borrow money using the equity in your home or an investment property.
At ABC Finance, we offer a whole of market homeowner loan broker service with a low, fixed £1,495 broker fee, saving our clients thousands.
What is a homeowner loan?
A homeowner loan is a type of loan that allows you to release funds from your property or an investment property (known as buy to let homeowner loans).
Almost any property can be used to raise funds using this type of loan, as long as it has sufficient equity to meet the lender’s requirements.
These loans are known by several names in England, including secured loans, home equity loans and second charge mortgages.
Common uses include homeowner loans for home improvements and homeowner loans for debt consolidation.
How do homeowner secured loans in England work?
Homeowner secured loans work by releasing equity from your property.
The funds are released to you and then repaid through regular monthly repayments, much like how a mortgage is paid. Failure to keep up repayments would see your loan go into default.
These loans are a longer-term type of borrowing, with the loan term usually being between 10-25 years.
The amount you can borrow is decided based on the lender’s homeowner loan criteria. This normally includes your property value, the proposed loan to value ratio, your credit score (or credit history) and the lender’s affordability guidelines.
Read more – Homeowner loans for self-employed borrowers or how to get a homeowner loan in Wales.
Can a homeowner loan be used as a replacement for a remortgage in England?
Yes, a homeowner loan is a replacement for a remortgage or further advance from your current mortgage lender.
Should your current mortgage lender refuse to offer further borrowing, or offer on unfavourable terms, a homeowner loan is the perfect alternative. When looking to take a home loan, you will require consent from your mortgage lender.
Why are homeowner loans in England Popular?
Homeowner loans are popular for the flexible lending criteria and simple application process.
The ease of raising funds makes them popular with borrowers who want to avoid being bogged down in a lengthy application process that takes up a lot of time. It’s very easy to apply for a homeowner loan.
In addition, as they allow you to borrow over a long loan term, they’re an excellent option for borrowers who are looking for low monthly repayments. Lenders allow you to borrow anything from £10,000 to £500,000 (or even more in some cases).
For this reason, they’re very popular with borrowers who are looking to borrow more money than would be possible using an unsecured personal loan.
What can a they be used for?
In England, homeowner loans are used to release equity from your property. Common uses include:
- Home improvements
- Debt consolidation
- Business investment
- Funding large purchases
- Funding property investment
- Funding school fees
While these are common uses, we can raise funds for almost any purpose.
Read more – homeowner loans in Northern Ireland or homeowner loans in Scotland.
How can I get a homeowner loan in England?
The easiest way to get a homeowner loan in England is to use a reputable homeowner loan broker.
A good broker will scour the market to find the best deal based on your circumstances.
The big consideration when it comes to choosing a broker is the cost of broker fees. Many brokers charge up to 12.5% of the loan amount – £5,000 on a £40,000 loan!
At ABC Finance, we offer exceptional service with a market leading, fixed £1,495 broker fee to help save our clients money.
Homeowner loans for homeowners in England
An example of how a homeowner loan could be used by a homeowner:
- You are looking to borrow £50,000 by releasing equity from your property to fund home improvements.
- Your current mortgage balance is £200,000 and your property value is £400,000.
- You raise funds and undertake a single storey extension and full redecoration of your property.
- This raises your property value to £500,000, giving you a £50,000 profit and an improved standard of living.
In England, the maximum loan amount is up to 95% loan-to-value, so 95% of what the property is worth, minus your existing mortgage balance.
How quickly can you get a homeowner loan?
A homeowner loan can be arranged in as little as 3-14 days, making it a great option for when you need funds quickly.
Most loans can be completed without the need for a physical valuation of your property, or the need to include a solicitor.
This makes the application process much faster than other similar products such as a remortgage.
Read more – How to get a homeowner loan or try our homeowner loan calculator.
How much can I borrow with a homeowner loan in England?
Using a homeowner loan, you can borrow anything from £10,000 to £500,000.
Your maximum loan amount will depend on your property value, loan to value, chosen lender and your ability to meet your lenders affordability criteria.
Lending is usually limited by the maximum LTV or affordability rules.
Our team of experienced loan brokers can calculate your maximum loan and offer a quote within 1 hour.
Alternatively, to understand your likely monthly repayments, try our homeowner loan calculator.
What are the lending requirements
To get a secured loan in England you must meet the following criteria:
- Be a homeowner
- Not exceed a maximum of 95% LTV (based on your new loan and existing mortgage)
- Meet the lender’s affordability criteria
- Supply the documents needed to get a loan
How much do they cost?
The cost is made up of 2 factors – interest and fees.
The first, and greatest cost is the cost of interest. Homeowner loan rates start at 5.99% and are usually between 5.99% and 9%.
Your interest rate is decided based on the lender chosen, loan to value, whether you choose a fixed rate homeowner loan or variable and your credit history.
Next is the cost of fees. There are several fees to pay when taking out this type of loan, although most can be added to the loan.
The main fees are:
- Lender arrangement fee – This fee, also known as a product fee is charged as part of the setup of the loan. In some cases, there is a trade-off between paying a higher arrangement fee to secure a lower rate, or minimising fees at the expense of a higher rate. This fee can usually be added to the loan.
- Valuation fee – Valuation fees are payable where a valuation is required. The fee generally covers a basic survey of the property. In many cases, we can proceed using only a desktop or automated valuations (AVM), there is usually no charge for this and it has the advantage of being instant.
- Broker fee – Broker fees are a hot topic in the secured lending market. Many brokers charge high fees, often 12.5% of the loan amount. While this can be added to the loan, paying a high fee will increase your monthly repayments and result in significantly more interest being paid over time (interest is charged on any fees that are added to the loan). At ABC Finance, we charge a fixed £1,495 broker fee, saving our clients an average of £2,880 (based on a £35,000 loan)
How is a homeowner loan repaid in England repaid?
A homeowner loan is repaid through regular monthly repayments over the loan term.
Almost all loans are arranged on a capital repayment basis, meaning the loan is repaid through monthly payments, which are made up of both capital and interest.
Should you choose to repay your loan early, this is possible. Many borrowers choose to refinance their loan and combine it with their mortgage when they remortgage their property.
Most lenders also offer the ability to make overpayments on the loan, you can usually overpay by up to 10% of the loan balance.
FAQs
Can I get a fixed rate homeowner loan in England?
Yes, fixed rate homeowner loans are a popular option for borrowers in England who are looking for certainty that their monthly repayments won’t increase during their promotional rate period.
It’s important to note that many fixed rate products come with early repayment charges (ERCs) during the fixed rate period (although we can offer products without ERCs or penalties for early repayment).
Can I get a homeowner loan if I have bad credit?
Yes, we offer a specialist range of bad credit homeowner loans for borrowers with a less than perfect credit score.
Bad credit such as CCJs, defaults, missed payments, previous bankruptcies or mortgage arrears is not necessarily a problem when applying for a home loan against your property.
Are homeowner loans FCA regulated in England?
Yes, homeowner loans are regulated by the Financial Conduct Authority (FCA) in England.
The FCA only regulate loans secured against a property that you have ever, currently, or plan to reside in as your primary residence. The exception is loans secured against your home, which are to be used solely for business purposes.
These loans are unregulated, although as an FCA regulated homeowner loan broker, we will still offer you the same high level of customer service, even on unregulated loans.
