Homeowner loans as the name suggests are a form of loan for which only homeowners are eligible to apply.
Until the recession some homeowners opted for unsecured loans, and these loans were often granted as the lender had the security to some extent because if the borrower fell badly behind in his repayments, the loan lender was able to take out a form of secured decree known as an inhibition.
An inhibition, as it is a form of security is placed on the Land Registery, and if the homeowner wants to sell up and move house the inhibition has to be payed off and the funds at last go to the loan granter.
Now with the shortage of funding available it is almost impossible even for a homeowner to obtain an unsecured loan, unless he is absolutlety blue chip. That means someone who has lived at the same address for a number of years and is on a good salary in a job that he has been in for several years.
The only real hope of a homeowner obtaining a loan at present is by applying for a secured loan. As the name secured suggests a secured homeowner loan is secured by an asset, and in this case the asset is the equity on the property.
Before the crunch 125% equity loans were available which meant that homeowners with little or in fact no equity in their property could obtain fairly large secured homeowner loans. This was rather fool hardy, and when house prices started to follow the situation became dire for the secured loan lenders concerned.
There is no longer availability of the 125% plan and it is completely dead and buried, and unlikely to ever appear again at any time in the future.The maximum LTV is now 70% and 80% for self employed and employed secured homeowner loan borrowers respectively.
In the past it was sometimes too easy to obtain a secured homeowner loan, and now it has gone to the opposite extreme, and homeowners with completely good credit ratings can now find it difficult to obtain a homeowner loan.
What is required is for a new secured homeowner loan lender to enter the market who is prepared to lend homeowners with good credit ratings secured loans of up to 90% LTV or the end of these excellent homeowner loans could be near.
|
|