Homeowner loans as the name suggests are a form of loan for which only homeowners are eligible to apply.
Homeowners can apply for either an unsecured or a secured homeowner loan. Before the advent of the credit crunch it was relatively easy for a homeowner to obtain an unsecured loan, because if the borrower defaulted on payments the loan lender could place an inhibition on the property.
An inhibition is recorded at the Land Registery just as the mortgage or any secured loan is.If the homeowner wants to sell his house anytime in the future he will have to clear off the inhibition, and the unsecured loan lender will get his money back.
As loan funding of any kind is not very available in the current economic climate unsecured loans are almost a thing of the past unless you are someone who hardly requires a loan in the first place. You would have to be settled as regards your job and your years at the same address to have any chance at all of being considered for an unsecured loan.
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 recession it was possible to obtain a secured homeowner loan up to 125% of the value of the property. This meant that if a property was worth 200,000 you could add up to 25% more than the value of the property which in this case meant that if the mortgage balance was 190,000 it was possible in theory to be granted a homeowner loan up to a maximum of 50,000.
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.
The ideal scenario would be for a new homeowner loan lender to enter the market place who would grant secured loans of up to 90% LTV, and help revive this most ailing of industries.
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