Homeowner Loans

Homeowner loans are a good way for people to borrow money they may need, especially if their circumstances mean that an unsecured loan isn’t possible. If you have struggled to obtain an unsecured loan from the bank, and are a homeowner in England or Wales, a secured loan is the best option if you’re looking to obtain credit. We’ve put together some frequently asked questions by those looking for homeowner loans to help you make an informed decision before choosing to take out a loan.

What are homeowner loans?

Homeowner loans or ‘secured loans’ as they are often called, are available to people who own their own homes or who currently hold a mortgage. The loan taken out is secured against your home which offers security to the lender. However, we will only offer a loan to customers who can afford to make the repayments.

How do secured loans differ from unsecured loans?

Secured loans work differently to unsecured loans as the decision to lend isn’t solely linked to your credit rating. Meaning a less than perfect credit history needn’t be a barrier to you getting the money you need. It is called a  secured loan because it is a loan that is ‘secured’ against your property.

Secured loans, or sometimes otherwise known as ‘second-charge loans’, are called such as they are effectively a second charge against your home (the first being your mortgage). If you would like to know more regarding secured loans vs. unsecured loans read the facts you need to know below.

Secured Loans vs. Unsecured Loans

With a great variety of different loans available, it can sometimes be difficult trying to decide which loan is right for you. Your own personal circumstances, such as your income, outgoings, your credit score, whether or not you own a property, whether you need the loan to be long or short term, and even why you need it, are some of the crucial factors in determining which type of loan will suit you best.

The Secured Loan

A secured loan is a loan where your property is used as security against the money lent. It’s sometimes known as a secured homeowner loan or a second mortgage, and the amount that you can borrow will be calculated based on the equity you have in your property, as well as your personal circumstances. The equity you have in your property is determined by its market value less the amount that is still outstanding on the existing mortgage.

Since homeowner loans are secured, they suit people looking to borrow larger amounts, and many banks and building societies will lend up to £100,000 as a secured loan, although it is possible to find deals for more. Repayments can be spread over periods of up to twenty years, keeping the monthly instalments relatively low.

Interest rates on secured loans tend to be lower than those of unsecured loans. However, factors such as the size of the loan, the length of time over which you wish to make the repayments, the equity you have in your property and your credit score all go towards determining the interest rate you will pay. Depending on these circumstances, the interest rate calculated for you to pay could be higher than expected.

Taking on a homeowner loan is a serious financial decision. If you are unable to keep up with your repayments, your home will be at risk of repossession, so it is vital that you are absolutely sure you will be able to afford the monthly payments.

The Unsecured Loan

Unlike a secured loan, an unsecured loan is available to anyone who has a reasonable credit rating. Although the interest rates can be higher than those of a secured loan, taking out an unsecured loan can still work out cheaper than using a credit card.

These loans are more flexible, in that you can choose how long you wish to make your fixed payments for. An unsecured loan will generally run for a shorter period than a secured loan.

Since there is no property secured against the loan, if you fail to make a payment, there will be no risk to your home. However, the amount you can borrow is much lower — the maximum amount for an unsecured loan is £25,000.

As with the secured loan, the interest rate you will pay will depend upon various factors, such as your credit rating, the size of the loan and the length of time over which it is repaid. Advertised rates are only representative — depending on your circumstances, you may have to agree to pay a higher rate.

The interest rates and terms on offer for loans can vary significantly. It’s important to shop around and read the small print before settling on the deal that is right for you.

Can I get a homeowner loan?

In order to apply for a secured homeowner loan through Arrow Loans you must fit our criteria:

  • Aged 18-68
  • A homeowner occupier
  • Live in the England or Wales
  • Be able to afford the repayments comfortably from normal income

What do I need to do to apply for a homeowner loan?

It is a very simple process through Arrow Loans and you can get started here. You will NOT pay any up-front fee’s and we will give you a decision very quickly.

What might homeowner loans be used for?

A secured homeowner loan through us can be used for almost any purpose. So whether you need the loan for those home improvements you’ve been putting off, for a new car or for a family holiday you’ve been waiting for, now you can.

How much can I borrow?

Loans for homeowners through Arrow Loans are available for people who are looking to borrow between £2,500 and £25,000.

How long is the repayment term?

The amount borrowed can be customised to whatever suits you best. Arrow Loans offers secured homeowner loan repayments up to 180 months (15 years). And, because the loan can be repaid over a longer period this means we could even offer a lower affordable monthly repayment amount.

Are there any fees to pay?

We are committed to telling our customers about our fees. There are NO fees or costs payable before the loan is issued. When your loan is issued there will normally be an arrangement fee of up to £395 added to your loan amount. This fee will vary as it is intended to cover our costs, such as legal and valuation, on a case by case basis. The amount you repay is clearly stated on your loan quote.

Can the loan be paid off earlier than agreed?

Unlike many other secured loans for homeowners out there we allow our customers to overpay and make a lump sum payment which will reduce the amount of interest repaid on the loan.

Does negative equity matter?

Unlike many other secured lenders we will not turn you away if you have negative equity in your property. Whilst this doesn’t necessarily mean we can guarantee that we can get you a loan. We will however, take a look at your circumstances and affordability and see if we can get you the homeowner loan you need.

At Arrow Loans we listen to you. Your application will be individually assessed by your Personal Account Manager, not by a computer. They will discuss your situation with you and base their decision on your present circumstances, rather than solely on your credit history. They will also be there for you from your first discussion, right through until the money is in your account.

We’ll also be on hand throughout your loan term, so if you have any concerns at all, your Personal Account Manager is always just a call away.

It doesn’t even matter if you’ve already had a homeowner loan secured against your property in the past; we may still be able to help you.