Homeowner Loan - a Loan With Flexible Terms

By: Aisha Cristal

The main concern of a lender is to get back his money along with interest. For this purpose, he may require you to provide some security. This security is usually your home. Any homeowner can pledge his home and get a big loan amount.

When the lender gets your home as security, there is little chance of non-repayment of the loan. If default does take place, the security can be repossessed and sold off to recover the loan amount. Thus, the lender's money is almost safe in this case.

A homeowner loan is nothing but a loan against your home. When you take homeowner loan, an agreement is prepared. This is called loan agreement. It stipulates all the terms and conditions that are relevant to the transaction. In case of homeowner loan, lender provides you flexibility in use and repayment. These are the special features of these types of loans.

Flexibility in use means that a borrower can apply the funds for a number of purposes. So, you can take out a homeowner loan and use it for debt consolidation, home improvement, car purchase, etc. This loan provides you a lot of freedom. Different people have different reasons for taking out such loans. Flexibility in repayment is a totally different concept. It means that you can choose between a repayment term that starts from as low as 6 months and can go up to 25 years. You can also select repayment method according to your convenience.

In case of homeowner loan, there are several repayment methods. You can opt for Interest Only method, Repayment Plan, partial interest and partial repayment method, etc. Even the rate of interest can be fixed or variable depending upon which way you decide to go. Variable rate of interest keeps on fluctuating in accordance with the base rate of interest as decided by the Bank of England from time to time.

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