Homeowner Loans For Debt Consolidation
Homeowner Loans For Debt Consolidation
Homeowner loans can be used to consolidate debts into one low monthly payment. Get the best deal with ABC Finance.
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
If you’re struggling with the monthly repayments on your unsecured debts such as unsecured personal loans, credit cards, store credit and car finance, a homeowner loan could help to reduce your monthly costs.
How can a homeowner loan be used to consolidate debts?
The easiest way to get a homeowner loan for debt consolidation is to work with a reputable homeowner loan broker.
A good broker will scour the market to find the best deal based on your circumstances, and then help you to complete the application process with minimal fuss.
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.
What is a homeowner loan?
A homeowner secured 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, including secured loans, home equity loans and second charge mortgages.
Homeowner loans are often used for debt consolidation purposes.
Is a homeowner debt consolidation loan a good idea?
A homeowner debt consolidation loan is a good idea if you’re looking to reduce your monthly repayments or simplify your monthly outgoings.
Home loans allow you to reduce your borrowing costs each month, by allowing you to repay the funds over a longer term. This frees up your cash flow and reduces the financial pressure that could result in late or missed payments on your debts.
How much can I borrow using a home loan to consolidate debts?
When taking out a secured debt consolidation loan, you can borrow anything from £10,000 to £500,000.
Your maximum loan amount is dependent on the value of your property, the proposed loan to value, the lender you choose to work with, and your ability to meet your lender’s affordability criteria.
Lending is usually limited by the maximum LTV or affordability rules.
Our team of experienced homeowner loan brokers can calculate your maximum loan and offer a quote within 1 hour.
Read more – Homeowner loan application process or Will my mortgage lender let me take out a homeowner loan?
Why do people choose to secure debts that were previously unsecured?
The main reason that people choose to secure previously unsecured debts is to reduce their monthly outgoings.
Unsecured debt tends to be offered over a short term, whereas secured borrowing can be taken over a longer term. In addition, secured borrowing is easier to qualify for as you’re offering the lender collateral over an asset.
What debts can I repay with a homeowner loan?
You can repay almost any debt with this type of loan, including:
- Unsecured personal loans
- Credit cards
- Store cards
- Overdrafts
- Existing homeowner loans
Can I extend my loan term to reduce my monthly repayments?
Yes, as homeowner secured loans can be taken over a term of 5-25 years, it’s possible to extend your loan term to reduce your monthly repayments.
When extending your term, you will inevitably reduce your monthly costs, but this will increase the total interest paid.
Reducing the loan term will increase your monthly costs but reduce the total interest paid.
Homeowner loans for debt consolidation in the UK
An example of how a homeowner loan could be used to consolidate debts:
- You are looking to borrow £40,000 by releasing equity from your property to repay existing unsecured debts. Existing debts are a £25,000 loan over 5 years (current balance £18,000) and £22,000 of credit card debt.
- Your monthly debt repayments total £1,325.84, with a mortgage balance of £200,000 and a property value of £400,000
- A homeowner loan over a term of 25 years and an interest rate of 7.9% is offered. The new monthly repayment will be £306.08.
- The application is approved and the total monthly saving is £1,019.76 per month.
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 consolidation loan?
A homeowner loan to consolidate debts can be arranged in 3-14 days. This means that a loan could be arranged and your debts consolidated in under 2 weeks in most cases.
To ensure your application is completed quickly, we help you with the paperwork, gathering the required documents and manage your application with the lender on your behalf.
We’ve been established since 2000 and our experience in the market allows us to drive applications to completion quickly and simply.
How much can I borrow with a homeowner loan to consolidate my debts?
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.
Get in touch now and our team of experienced secured lending experts can quickly calculate your maximum loan and expected monthly repayment. We can tell you if you’re likely to be approved and provide a detailed quote within 1 hour.
How much does a home loan for debt consolidation cost?
The monthly cost of a home loan for debt consolidation will usually be far lower than the cost of the existing unsecured debts. This is due to the longer loan term and lower interest rates on this type of borrowing.
Homeowner loan rates are usually between 5.99% and 9%.
On top of the interest charges, there are also some fees to consider, they are:
- Lender arrangement fee – This fee, also known as a product fee is charged by the lender and can usually be added to the loan.
- Broker fees – Homeowner loan broker fees can be very high, with many brokers charging a fee of 12.5% of the loan amount (£5,000 on a £40,000 loan). At ABC Finance, we charge a low, fixed £1,495 broker fee.
- Valuation fees – Most loans don’t require a physical valuation and will therefore not come with a valuation fee, but where charged, this fee is payable early in the application process.
Read more – Homeowner loans for self-employed applicants or Will my mortgage lender let me take out a homeowner loan?
How is a secured debt consolidation loan repaid?
A secured debt consolidation loan is repaid through regular monthly repayments over the loan term.
If you take out your loan on a capital repayment basis, your loan is repaid in full at the end of the term, as long as you make all repayments on time and in full. Some buy to let homeowner loans are offered on an interest only basis, should this be required.
FAQs
Can I get a fixed rate homeowner debt consolidation loan?
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.
When consolidating debts that have been difficult to manage, certainty of your monthly payments can reduce the stress around meeting your monthly obligations.
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 who are looking to consolidate debts.
Bad credit such as CCJs, defaults, missed payments, previous bankruptcies or previous mortgage arrears aren’t necessarily a problem when applying for a secured loan against your property.
Are secured debt consolidation loans FCA regulated?
Yes, secured loans for debt consolidation are regulated by the Financial Conduct Authority (FCA) in Northern Ireland (and the whole of the UK).
The FCA only regulates loans secured against a property that you have ever, currently live in, or plan to reside in as your primary residence in the future. The exception to this rule is loans secured against your home, which are to be used exclusively for business purposes.
These loans are unregulated, although as an FCA regulated secured loan broker, we will still offer you the same high level of customer service, even on unregulated loans.
