Home Loans Right Approach To Become A Homeowner
04-10-2016 / By: Prosper Housing Finance Limited
Each one of us wishes to possess a home of our own. With some pounds in your savings accounts, it won't be possible to purchase a house that requires a big investment. If you dream to own a home, home loans are the best way to finance your dream.
Home loans are offered against the equity in ones home. Equity can be defined as the value of the home after deducting outstanding mortgage amounts and other loans. Lenders take various factors into consideration while calculating the home equity such as location of the home, the structure etc. The loan will be secured on the borrower's home and the transaction will not impact existing mortgage in any way.
A home loan is basically taken to purchase or to construct a new house. Borrowers can also use it to make home improvements, consolidating their existing debts, to buy a luxurious car or for any other personal purpose.
The loan proceeds of a home loan can supplement both mortgage and secured loans. Homeowners can put their existing house or real estate as collateral to get finance to purchase a new house. However, if you are a tenant you can put the new house as collateral to get a home loan.
Home loans cater to UK residents with different loan options, which make it easier for borrowers to repay the interest on the loan in the most comfortable and convenient manner. Annual percentage rate or APR is the term used to denote the rate of interest. Home loans give borrowers the option to pay either fixed interest rate or adjustable rate interest rate on the money borrowed. Fixed interest rate option implies that interest rate will remain the same throughout the life of the loan. While an adjustable interest rate would imply that the rate of interest would change periodically with the corresponding fluctuations in an index, with which it is attached.
This interest rate is also known as variable rate home loan.
A borrower can also opt for interest-only loan option. An interest-only loan gives borrower the opportunity of paying just the interest or the interest and as much principal as he wants in any given month during initial period of loan. If you choose this option, your monthly payment will be lower than in case of an interest and principal repayment option.
There are various loan providers in the finance market. They may devise ways to overcharge borrowers who are not much conversant with the ways of the market. Interest is generally charged on the higher side, and borrowers also have to shell a larger sum as fees for the services of the lender. Thus, a few efforts on your part can save you from paying higher interest or huge fees to lenders.
First of all, find out your credit score. Credit rating agencies such as Equifax, Experian or Transunion can help you get your personal credit report. Knowledge of credit score can help to grab good rates in the market.
Next thing you must do. Search for lenders who provide home loans. You can apply for a home loan online too. Applying for a loan online makes it more convenient to get a fast and cheap home loan. Saving your time and helps you find the best deal at best rates. Most of the lenders provide loan quotes to borrowers, which are free or carry nominal fees. Collect loan quotes from lenders and compare them to find the best home loan.