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Homeowner Loan Process – 7 Simple Steps

Get a homeowner loan with a low, fixed £1,495 broker fee

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Author: Gary Hemming CeMAP CeFA CeRGI CSP
20+ years experience in homeowner loans

For those who are looking for a loan, homeowners are at a real advantage. This is because they’re able to use the equity in their home as security for a loan. These loans, known as homeowner loans, or secured loans allow borrowers to borrow more, access lower interest rates and longer loan terms.

In this guide, we break down the homeowner loan process and some key tips that can speed it up.

1. Calculate the equity in your home

To calculate the equity in your home, you simply take the property value and then minus any borrowing that is outstanding against it.

For example, a property that is valued at £300,000 and has a £200,000 mortgage outstanding has £100,000 equity.

It’s important that you’re as accurate as possible when calculating this. That can be achieved by doing the following:

  • Contact your current lenders to find your exact outstanding balance – doing this will ensure that you know exactly how much is outstanding.
  • Get your property valued – talk to a local agent and request a valuation. In most cases, they’ll value your property for free.
  • Check your loan to value (LTV) – loan to value is the percentage of borrowing against the property value. LTV is calculated by dividing the outstanding balance against the property value and then multiplying it by 100.

2. Check your credit record

Check your credit record to make sure you know exactly what shape your file is in and whether you’re likely to have a low credit score.

Checking your credit file before applying will alert you to any errors on there and reduce the risk of a failed application.

While many people are aware that too many credit searches in a short time can lower your credit score, this isn’t an issue when you check your own file. This is because a soft search is used, meaning it doesn’t show up on your file and therefore doesn’t lower your score.

3. Work out how much you’d like to borrow

Understanding how much you need is an important step. Break down exactly what the funds will be used for and how much is needed. This will ensure you borrow the exact amount needed, no more and no less.

Borrowing too much will result in additional interest being paid needlessly.

To help with this, try our homeowner loan calculator, which will allow you to work out your potential monthly payments.

4. Consider what you would like from a product

Do you want the certainty of fixed monthly repayments or the lowest rate possible? Is the option to overpay free from penalties important to you?

All of these things will impact which product best meets your needs.

5. Compare brokers

The next step is to consider which broker you would like to work with. The key differences between brokers mainly centre around service levels and broker fees.

Using a reputable broker with solid reviews is always a wise move.

Broker fees can vary massively between each broker. Some charge fees of up to 12.5% – £6,250 on a £50,000 loan, whereas we only charge a low, fixed £1,495 broker fee.

6. Compare homeowner loan products

Once you’ve selected a broker, or a couple of brokers, you can compare suitable products to find the right one for you. It’s rarely as simple as choosing the lowest homeowner loan interest rate.

Each lender will have their own fees and interest structure and you should compare the total cost of the loan, rather than just the interest rate.

We always work with you to make this simple, comparing products on your behalf.

7. Select a product and apply

Once you’ve chosen a product, you’re ready to apply. At this stage, you must complete the application form and supply the supporting documents that the lender requests.

For more on this, read our guide on how to get a secured loan and the documents required.

How long does a homeowner loan take to process?

The homeowner loan process usually takes 2-3 weeks. Should your application be successful, you can expect to receive your funds.

The time taken to process your application depends on how quickly you respond to lender requests. You can speed up your application significantly by responding promptly to any requests.

Of course, we always do whatever we can to ensure that your application completes exactly when you would like it to.