How Much Funds Can I Raise Against My Home?

By: Anaya

The lenders always treat homeowners in a preferential manner. If you are providing your home as a security, you can easily expect a low rate of interest, a big loan amount and a longer repayment period. Your home is a surety to the lender and this strengthens your bargaining power.

As for the loan amount, it depends on the equity in your home. Lenders have different credit policies. Subject to individual policies, a large number of lenders offer up to 80 per cent loan to value (LTV) ratio. Some lenders in the UK loan market are also offering LTV up to 125 per cent. This is surely not a standard practice and your lender may not give you that much leeway in offering the loan amount. You will have to find out what LTV your lender is willing to offer you. For this purpose you will have to compare loans offered by different lenders and check the LTV ratio.

If you know the equity in your home, you can easily find out the loan amount that you are eligible for. Suppose your home is valued at ?200,000. If your lender is willing to offer you 80 per cent LTV, the maximum amount of loan that you are eligible for comes out to be ?160,000. Secured loans can be extended up to 25 years - a long time period that can make the repayment a lot easier. However, the bigger the loan period, the more will be the interest payments.

If you have already used 80 per cent of your home equity, you should try a new lender who is willing to give you 125 per cent LTV ratio. This will help you in raising more secured loans against your home. Compare loans and the terms and conditions applicable thereto and find out which lender is willing to offer you maximum LTV. It will help you in raising maximum possible loans against your home.

Home Loans
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