Homeowners generally do not feel like going ahead with the decision of borrowing money by using their home or personal property as mortgage. It is a place where they have created countless memories over the years with their loved ones. Hence, when it comes to borrowing money using your home as security – most of the homeowners take a backseat. What if you do not have to use your home as a security to borrow money? Yes. You can acquire funds without offering any collateral. There are two types of homeowner loans – secured and Unsecured Homeowner Loans. A secured homeowner loan needs you to put up collateral while an unsecured homeowner loan doesn’t need any collateral.
An unsecured homeowner loan doesn’t require you to pledge any asset to borrow money. If you fall behind repayments, then your home is not at risk. The lender doesn’t have the authority to possess your property. Therefore, there is no risk of any collateral damage with this loan. Also, you can borrow an amount from £1,000 to £35,000. You can spread the cost of repayment over several months ranging from one year to seven years. The Homeowner Loan can be used without any restrictions. From debt consolidation to a wedding – use it for whatever reasons you want to. However, avoid using it for investing in the stock and share market.
So far, so good? Well, now let us understand the sad part of this loan. Your credit score is at risk. If you do not make repayments on time and in full – then your credit score will be impacted. A credit score is an indicator of your finance management. If you have a bad credit score lenders start considering your profile as risky and they may turn it down altogether if you apply for a loan. In addition to that, you will not find loans at low rates of interest with a poor credit score.
Loans for homeowners can turn your financial fitness into a complete disaster if you do not manage it responsibly. If you fail to meet the repayments, after a certain number of payment failures, the lender may report it to the court. Being issued with a County Court Judgement (CCJ) can restrict you to borrow money for up to six years. Lenders may not consider your loan application at all if they find a CCJ on your name.
What Should You Do?
If you require money and you know that you can afford to repay it on time, without any fail then opting for a homeowner loan is a wise decision. It will help you build and maintain your credit score. If you do not think you can afford to repay it – consider alternatives. Ask your friends and family for monetary support rather than taking out a loan. A loan may serve your purpose, but you must be responsible enough to repay it on time. Therefore, never borrow more than you can afford to repay.