How Many Homeowner Loans Can I Have?
How Many Homeowner Loans Can I Have?
Can you have more than one home loan? Find out below and 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
In theory, it’s possible to have multiple or even unlimited homeowner loans, although that’s not realistic in practice. In practical terms, you can only get one or two homeowner loans on top of your mortgage.
This is due to the fact that most lenders will only lend on a ‘second charge’ basis, with only a few willing to lend on the third charge basis.
What is a homeowner loan?
A homeowner loan is a type of property backed loan that allows you to release funds from your property or an investment property (known as buy to let homeowner loans). Your property is used as collateral for your new borrowing.
Almost any property can be used to borrow money using this homeowner secured loan, as long as it has sufficient equity to meet the lender’s requirements.
These loans are known by several names in England, including second charge mortgages, secured loans and home equity loans.
Common uses include raising funds for use as homeowner loans for home improvements or homeowner loans for debt consolidation.
What is a charge?
A charge, also known as a legal charge, allows a lender to secure the money they have lent against your property.
It is a legal document signed by the borrower. Once signed, it is registered against the property at the Land Registry to alert any potential buyer of the existence of the debt.
Homeowner secured loans are secured against your property on the Land Registry, as opposed to unsecured loans, which require no collateral.
Most people associate a charge with mortgages – as when you take out a mortgage, the lender places a charge on the property you’re buying.
Read more – apply for a homeowner loan or can I remortgage with a homeowner loan?.
Why do most lenders favour a second charge over a third charge?
The reason most lenders favour second charge lending over third charge is due to the priority of payment.
If you default on payments, your property may be repossessed and sold to recover the debt.
In this event, priority is given to the first charge lender, usually your mortgage lender. Once they have been repaid in full, any remaining funds go towards repaying your second charge lender.
Only once this is done does the third charge lender get repaid. While this delay isn’t a problem, the big issue is what happens should there be a shortfall. In this situation, should there be no funds left after the first and second charges have been repaid, the loss is fully borne by the third charge lender, rather than being shared between each lender.
What should I do if I already have a homeowner loan but need further borrowing?
If you have a homeowner loan but need further borrowing, the best option is to speak to a reputable homeowner loan broker.
A good broker will be able to advise you on the best way to proceed based on your current circumstances and loan requirements.
Before taking a new loan, you should consider whether a homeowner loan or remortgage is right for you, and whether a second or third charge homeowner loan would be a better fit.
As a good broker, we can also offer a range of products to suit almost all borrowers including fixed rate homeowner loans, homeowner loans for self-employed borrowers and joint homeowner loans.
Will I qualify for a homeowner loan?
There is a good chance that you will qualify if you own your property, have sufficient equity and meet the lenders affordability rules.
As we work with lenders from across the market, we can meet the borrowing needs of most applicants, no matter their individual circumstances.
Subject to an affordability assessment, application form, credit check and income assessment, we can work with a range of potential borrowers including self-employed applicants, retired applicants, those with bad credit or those needing to stretch affordability rules to consolidate debts.
Read more – homeowner loan process or how to get a homeowner loan.
Will I be eligible if I have bad credit?
Yes, you can still be eligible for a homeowner loan if you have bad credit such as defaults, CCJs, IVA, bankruptcy or even historic mortgage arrears.
Since the lender has security over your property, lending criteria are more flexible, provided you have sufficient equity and meet other requirements.
We even offer a range of specialist bad credit homeowner loans for this purpose.
