Secured loans have a slew of benefits. These loans offer a big borrowable amount and a relatively lower rate of interest as compared to loans of the unsecured variety. The lower rates are engendered by the presence of collateral. Lenders know that in the event of a default, they can always sell the collateral to get back the due amount.
Homeowner loans are loans where the loan borrower puts his home as collateral against the loan amount. These days, secured loans are loosely termed as homeowner loans because the collateral in question is generally a home.
Secured homeowner loans can be used for a variety of purposes, like funding a wedding or a holiday vacation, consolidating debts, purchasing a vehicle etc. Homeowner loans start from â‚?5000 and can go up to â‚?250,000.The repayment term is between five to twenty five years.
There are several avenues one can take in order to get homeowner loans. There are building societies and banks, as well as private lenders and the Internet. The first two have been since long established in the market. However, over the last decade or so, private lenders and the Internet have had a strong presence in the loan market. These avenues give the customer the much needed expediency and convenience.
In spite of the plethora of benefits attached with this loan type, there are a few drawbacks as well. Homeowner loans are restrictive in nature, in that these loans are available only to homeowners. Tenants have to do with unsecured loans. Also, in case of a repayment default, the borrower can lose his home. Then there is the hassling paperwork, spawned by property valuation.
It is well advised that people availing
homeowner loans do so with proper research behind them. There is the hazard of loan sharks to contend with. These unlicensed lenders provide what are seemingly perfect loans but those that come with hidden and extra charges that can add up to a fortune.
