For most people in the UK, home loans necessarily mean cheap financing. How can they not get cheaper financing when they have offered a home lien to the loan provider? Loan providers, however, overcharge borrowers who are not very familiar with the ways of the financial market. Interest is usually charged on the higher side, and borrowers also have to shell out a larger sum as fees for the lender’s services.
So there is no such thing as a cheap home loan concept? Cheap home loans do exist, but not as a general rule. Cheap home loans have to be supplemented by enough effort on the part of the borrower to make them possible. Although borrowers may not rest at any stage of the loan’s life and keep an eye on every cost added to the loan, efforts will need to be made primarily during the planning and decision-making stage. The fate of cheap home loans largely depends on the work done during these two stages.
It is not necessary for all borrowers to be well informed about the rules and regulations of the financial market. Advice obtained from external sources will be as useful as personal knowledge or experience. Among outside sources, independent financial advisers are the most respected. Independent financial advisers are bound by the rules of the Financial Services Authority to offer genuine expert advice. Due to the professional and independent advice they offer, it will be hard to dismiss their importance.
Mortgage loans are offered against the equity in the home. Equity is the approximate value a home will fetch if it is sold. For a more accurate valuation of equity, all mortgages and home equity loans should be deducted. Equity plays a decisive role in lowering the cost of home loans. Lenders compete to lend to homeowners with the highest equity due to the potential security they allow. The security will be in terms of the risk that a loan company poses to the loan agency. Because the potential risk of home loans can be easily covered by repossession of home ownership, home loans are called low-risk businesses. Consequently, home loan borrowers are preferable to unsecured loan borrowers.
Borrowers should make the most of the preference shown by the loan providers. Since the number of loan providers dealing with home loans is very large, borrowers can easily shop around and choose the lender that offers the best package. It is at this stage that borrowers’ decision-making skills are best utilized. Although the low cost of home loans will be preferred, it should not be at the expense of the other virtues. The personal requirements of the borrower must be kept paramount during the searching process. Therefore, a lender who lends at the lowest APR may not be suitable for the borrower if the slow amount is inadequate.
Borrowers can take out any amount between £1,000 – £500,000 as a home loan. The actual amount borrowed will depend on several factors such as home equity, borrowers credit history, etc. Loan proceeds from a cheap home loan can supplement both home and secured loans. For readers familiar with the uses of mortgages and secured loans, it will be common knowledge that mortgage proceeds are used to buy or build a home or property and secured loan proceeds are used for other financial needs. personal, such as debt consolidation, home improvements, etc. The proceeds from the home loan can be used for either. The tax benefits available to mortgage borrowers will continue on cheap home loans as well.
Now, we come to the interest rates that form the most commented topic in cheap mortgage loans. Typical APR on cheap home loans is in the range of 5.75% to 10.3% variable. The actual APR promised to the borrower may differ from the APR printed on the lender’s websites. Changes in the bank’s base rate and the borrower’s individual credit circumstances may cause interest rate differences. Negotiations on interest rates are possible. Borrowers, who are willing to enter into interest rate negotiations, will have to increase the amount of commissions they are willing to offer. The objective of these negotiations will be to bring the APR to the desired level.
Cheap home loan is a product of several decisions and negotiations. With the wide variety and choice available to borrowers, the decisions borrowers must make about home loans have increased enormously. However, the key to cheap home loans will not be in wandering through these decisions, but in making them correct. Consequently, the greater the number of correct decisions, the cheaper the mortgage loan will be, and vice versa. Now it’s up to you to decide where you want to be: with those who find home loans a burden due to poor decisions, or with those who enjoy home loans with the lowest rates.
