Homeowner Loans Wales
How To Get A Homeowner Loan In Wales
Get the best deal on your homeowner loan in Wales 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 borrowers in Wales thousands of pounds.
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 as security for a homeowner loan – as long as it has enough equity to meet the lender’s criteria.
These loans are known by a few names in Wales, including secured loans, home equity loans and second charge mortgages.
Common uses include raising funds for home improvements homeowner loans or debt consolidation homeowner loans.
How do homeowner loans in Wales work?
Homeowner loans work by releasing equity from your property as a lump sum loan.
The funds are released to you on completion of the loan and then repaid through monthly repayments, much like a mortgage.
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 key homeowner loan lending criteria. This includes your property value, the proposed loan-to-value ratio, your credit score (or credit history) and the lender’s affordability guidelines.
Can a homeowner loan be used as a replacement for a remortgage in England?
Yes, a homeowner secured loan is a replacement for a remortgage or further advance from your current mortgage lender.
Should your current mortgage lender refuse your application for further borrowing, or offer less than you require, a homeowner loan may be a suitable alternative.
Why are homeowner loans in Wales Popular?
Homeowner loans popularity is often attributed to the quick and easy homeowner loan application process and the flexible lending criteria.
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.
In addition, as they allow you to borrow over a long loan term, they’re an excellent option for borrowers who are targeting low monthly repayments.
Homeowner loan lenders allow you to borrow anything from £10,000 to £500,000 (or even more in some cases). For this reason, they’re extremely popular with borrowers who are looking to borrow more money than would be possible using an unsecured personal loan.
What can a homeowner secured loan be used for?
Homeowner secured loans are commonly used for:
- To fund school fees
- Home improvements
- Debt consolidation
- Business investment
- Funding large purchases
- To fund property investment
How can I get a home loan in Wales?
The best way to get a home loan in Wales is to use a reputable homeowner loan broker.
A good broker will search the whole market to find the best deal for you.
For most borrowers, the biggest factor 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.
Home loans for homeowners in Wales
An example of how a home 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 far nicer property.
The maximum borrowing 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?
It takes 3-14 days in most cases to arrange a homeowner loan from the point of application to the funds hitting your bank account. This makes them a great option for borrowers who are looking to secure funds quickly.
Most loans can be completed without the need for a physical valuation of your property, or the need to involve a solicitor.
This makes the application process much faster than other similar products such as a mortgage.
How much can I borrow with a homeowner loan in Wales?
You can borrow £10,000 to £500,000 using a homeowner loan – more in some cases.
Your maximum loan depends on your property value, loan to value, chosen lender and your ability to meet your lenders affordability criteria.
The limiting factor on how much you can borrow is usually either the maximum LTV or affordability rules.
Our team of experienced home 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.
Homeowner loan requirements
The requirements for getting a homeowner loan in Wales are:
- Be a homeowner
- Not borrow more than 95% LTV (based the combined value of your new loan and existing mortgage)
- Meet the lenders affordability criteria
- Supply the required documents needed to get a loan
Read more – Homeowner loan vs HELOCs or How many homeowner loans can I have?
How much does a homeowner loan in Wales cost?
Homeowner loan costs are made up of 2 factors – interest and fees.
The greatest cost is the cost of interest. Homeowner loan rates start at 5.99% and are usually between 5.99% and 9.99%.
Your interest rate is set based on the lender chosen, LTV, 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 homeowner secured loan 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)
Read more – homeowner loans in England or homeowner loans in Scotland.
How is a homeowner loan repaid in Wales repaid?
Much like a mortgage, homeowner loans are repaid through set monthly repayments over the loan term.
Homeowner loans are usually arranged on a capital repayment basis, meaning the loan is repaid through monthly payments, which are made up of both capital and interest.
While some loans are arranged on an interest only basis, these are almost always loans secured against an investment property, such as a buy to let homeowner loan.
Should you choose to repay your loan early, this is possible. Many borrowers choose to refinance their homeowner loan and combine it with their mortgage when they remortgage their property.
Read more – how to get a homeowner loan or homeowner loans in Northern Ireland.
FAQs
Can I get a fixed rate homeowner loan in Wales?
Yes, fixed rate homeowner loans are common and are a popular option for borrowers in Wales who are looking for certainty that their monthly repayments won’t increase during the early years of their loan.
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 poor credit score or adverse credit history.
Bad credit such as CCJs, defaults, missed payments, previous bankruptcy or previous mortgage arrears aren’t necessarily a problem when applying for a loan secured against your property.
Are homeowner loans FCA regulated in Wales?
Yes, homeowner loans are regulated by the Financial Conduct Authority (FCA) in Wales.
The Financial Conduct Authority only regulates loans secured against a property that you have ever, currently, or plan to reside in as your home.
The exception is loans secured against your home, which are to be used exclusively 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.
