Homeowner loans explained
What is a homeowner loan?
A homeowner loan (also known as a ‘secured loan’) is a loan specifically for people who own a home, as the name suggests. It’s a method of borrowing a large sum of money with relatively low interest rates, by securing the loan against your property.
This means that, if you cannot repay your loan anymore, your house could be used as collateral (though this is usually a last resort). Having this security means lenders are more willing to lend larger amounts with competitive interest rates.
Another result of this increased security for the lender means they tend to be more willing to lend to those with a less-than-perfect credit score. As all lenders look at your credit history as a means of assessing the risk in lending to you, those with lower credit scores can have difficulty borrowing money (because the risk of not getting it back is perceived as high by the lenders).
With homeowner loans, though, that risk is mitigated by the loan being secured to your property. So, while they still consider your credit history, it isn’t weighted as heavily as it is with unsecured loans.
How much can you borrow?
While personal loans tend to go up to a maximum of £15,000, homeowner loans allow you to borrow substantially more than this. This is why they tend to be used mostly for large projects such as home improvements or debt consolidation.
Exactly how much you can borrow is dependent on several factors including:
- the value of your home
- your equity (i.e. how much of your home you own outright)
- your affordability
- your credit history
Read on to find out about the pros and cons of secured homeowner loans.
How long does it take to get a homeowner loan?
It generally takes between three to four weeks to get a homeowner loan.
Exactly how long it’ll take for you will depend on how proactive you are with getting everything ready, signed and sent off. Also, you may have to get a survey of your home carried out (though this isn’t always required).
There are ways you can speed this process up, which we’ll go into below.
When will I get my homeowner loan?
Once your homeowner loan is approved, you can get the money in your bank as quickly as the same day.
How can I speed up my loan process?
Speeding up the process of getting your homeowner loan is really down to you. Although you can’t hurry the lender, you can make it easier for them which will speed up the process. Here’s how:
1. Make sure you fit the criteria
It sounds obvious, but one of the easiest ways to make sure the process goes as quickly as possible is to make sure you fit the criteria before you apply. We suggest you use an eligibility checker to find out the likelihood of being approved, before you apply – with no impact on your credit score.
2. Fix any errors on your credit report
Errors on your credit report can lower your credit score and slow the application processes right down, as the lender must investigate any discrepancies and that takes time. So, use an online tool to check your credit report in detail before you apply. If you spot any errors, you can fix them by reporting them to the relevant credit reference agency.
3. Prepare everything you need before you apply
A straightforward tip, but a reliable one. Getting your paperwork together beforehand saves a lot of time down the line. This means digging out documents that you’ve filed away before you even apply so that if the lender asks you for your P60 you’ve got it to hand to give it to them.
Bonus tip: write down a list of all the documents you might need before you apply (e.g., proof of ID, proof of income and proof of homeownership) and tick them off as you find them, so you know when you’re fully prepared and ready to apply.
5. Apply online
Whilst it’s still possible to apply for loans by post, in-branch (if going with a bank) or over the phone, these aren’t the quickest methods anymore. Applying online is quicker – and you don’t have to leave the comfort of your own home.
Homeowner loans from £10,000 to £500,000
- Check if you’re eligible before you apply
- We compare 100s of homeowner loans
- Getting a homeowner loan quote won't affect your credit score
Homeowner loans are secured against your property.