Homeowners - Always at Financial Advantage

By: Aisha Cristal

After over two years of rising interest rates regime, the UK financial market is likely to see the downward trend again in the coming time. Homeowners finding it difficult to find appropriate home loan deals will benefit the most if two to three interest rate reductions are carried out in the year 2008. The analysts are predicting the first rate cut in February after the monetary policy committee of the Bank of England vehemently voted against bringing down the rate in January.

The committee that has been handed over the task to manage base rate was concerned over the possibility of further rise in the inflation rate. People who have fixed rate mortgages or home loans will be deprived of the benefits arising from whatever the rate cut takes place.

Basically, there are two types of interest rates in case home loans. The fixed interest rate does not take into account any changes in the base rate or market conditions. On the other hand, the tracker mortgages that follows the base rate as set up by the monetary policy committee of the Bank of England from time to time, give all the benefit of rate cut to the borrowers. Besides home loans, many people resort to various financing schemes as brought forward by the lending institutes from to time.

Homeowner loans are the type of loans that are taken by pledging the residential property. These loans allow borrowers to raise upto ?250,000 or upto 70% loan-to-value, whichever is less. The contemporary UK financial market is not giving out 100% LTV as used to happen earlier especially before the credit crunch hit the UK markets following the US sub-prime collapse.

One aspect that is always favourable to the homeowners is their borrowing capacity as backed by the equity in their homes. Homeowner loans are available to the consumers against their homes at very low rates. The convenient instalments and long repayment period make these loans very attractive. Unsecured homeowner loans are another variant of these loans where no residential property is required to be pledged. However, borrowers may manage only upto ?25,000 in this case.

Unsecured homeowner loans are available with online lenders, high street banks and in the sub-prime market. It means that people having bad credit score may also apply for these loans, and if their application is sanctioned, they will be much relieved. Online search also provides you a benefit of online comparison of the loans that you plan to take.

Home Loans
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