It’s well known that homeowner loans offer good interest rates and the ability to borrow more than unsecured loans, but what are they? Why are the rates better?
Simply put, it is a loan only available to property owners (or mortgage holders), where your house is used as a security measure for the lender - just like your mortgage - so if you don’t repay your loan, your house can be taken as collateral.
Because of this extra security, you can make your asset work for you, and can often borrow larger sums of money with better interest rates than on an unsecured loan.
This doesn’t mean your house is at risk - providing you meet your repayments as scheduled there will be no risk whatsoever to your home.
Unsecured loans are almost always cheaper for those with decent credit scores, but secured loans provide lenders with, well… security, so they're more willing to lend to less than perfect credit scorers.
The maximum unsecured loan is £25,000, yet homeowner loans can be as much as £100,000 if you have the right circumstances.
Homeowner loan lenders prefer to lend for longer periods of time, because of the higher loan amounts - this means you can be more flexibile with your loan term to find the repayment that fits best for you.