Mortgage Collateral - Increasing Your Borrowing Power By Using the Equity in Your Home

With the current credit crunch that is sweeping the globe, it can be very hard to find banks and lenders that are willing to lend you sizable amounts of money. If you are currently a tenant, then you can find yourself in a situation where finding lenders willing to lend you money is next to impossible. If you are a homeowner who is currently living in the UK, then the good news for you is that since you have equity in your home, you will always find lenders who are more than willing to lend you money.

What's the reason? Collateral. Banks are looking to minimize their risk right now. They are not looking to lend significant sums of money without having at least some collateral in return. If you are a homeowner with existing equity in the home, then you will have no problems finding willing lenders.

Banks still need to make money. In the case of a secured loan, it's a win/win situation for the bank. They get to charge slightly higher interest rates than a typical mortgage, but they also have the comfort of knowing that they have some collateral, just in case you default on the loan.

There are many advantages to the borrower as well. A secured loan has a much lower rate of interest than an unsecured loan - a typical secured loan interest rate is between 7-10% APR, where an unsecured loan can easily run over 20%+ per year. This is a massive difference over the lifetime of a loan.

There are other advantages that present themselves as well. Secured loans can often be paid back over a period of up to 25 years - with unsecured loans, you usually get a maximum of five years to pay the loan back. Also, if you are a homeowner, you will have much more borrowing power compared to an unsecured borrower.

How much more? To figure how your maximum borrowing power as a homeowner, simply take the current appraised value of your home, and subtract any outstanding mortgages and secured loans from the total. This amount represents the equity in your home, which will also equal your maximum borrowing power. So if you own a home that is currently worth 250k pounds and you have a 200k mortgage outstanding on the property, then your maximum borrowing power with a secured loan would be 50k pounds (250k - 200k = 50k)

Secured loans can be used for many different reasons. You may want to consolidate some of your credit card loans. Or perhaps you are looking to perform some major renovations on your home (new kitchen, bathrooms and an addition for a new member of the family). These scenarios are both perfect for a secured loan.

Applying for a secured loan is quick and easy. Simply click on the link below, and you will be taken to our easy-to-use application form. Applying takes no more than five minutes of your time, and you are under no obligation to accept the loan should you be approved.

Apply today!



Apply for a secured loan today!