Unsecured Homeowner Loans: The Ups, the Downs and Everything In-between

An unsecured homeowner loan is a curious concept, though has the potential to be a highly cost-effective facility. As the name suggests, unsecured homeowner loans are personal loans issued exclusively to homeowners.

Unlike a secured loan, the facility is provided without any security being required. You must be a homeowner to qualify, but the loan is not secured against your home or any of your assets.

An unsecured homeowner loan can be used for almost any legal purpose, and can make an affordable alternative to conventional unsecured loans. However, there are positives and negatives to take into account prior to applying for a homeowner loan.

The Upsides of Unsecured Homeowner Loans

As outlined above, you do not need to put any of your assets on the line to qualify for an unsecured homeowner loan. This means that even if the worst case scenario plays out, you will not face the prospect of your home being repossessed.

Depending on the lender you borrow from, an unsecured homeowner loan can be issued from as little as £1,000 and up to around £35,000 or more.  Repayment terms are available from just a few months to several years, helping spread the costs to suit all budgets.

Interest rates and borrowing costs can also be more competitive than those of a typical personal loan, often with the option of early repayment; it is essential to compare the market in full with the help of an experienced broker, in order to ensure you get the best possible deal.

The Downsides of Unsecured Homeowner Loans

Unfortunately, homeownership alone does not guarantee eligibility for this type of loan. You will also need to have a good credit score and be able to provide proof of income. Your financial situation is likely to be scrutinised by your lender which will affect both your eligibility and the interest payable on the loan.

In addition, any late or missed payments will be recorded on your credit score and could make it difficult to qualify for competitive products in the future; applying for an unsecured loan being declined can also leave a mark on your credit history.

This is another reason why it is important to enlist Whole of Market broker support in order to assess your eligibility before applying. If a different type of product is more suitable for your needs, your broker will advise you accordingly and help you find the right lender.

When is An Unsecured Homeowner Loan a Good Idea?

An unsecured homeowner loan can be used to fund almost any project or purchase, up to a maximum value of around £35,000. If you have a good credit score and can comfortably afford the repayments, it could be a more affordable facility than a conventional personal loan.

There may be alternative options that could be even more cost-effective. For example, a secured homeowner loan may attach much lower overall borrowing costs, though with the caveat of your home being used as security for the loan.

Before applying, consult with an experienced broker to discuss the options available and ensure you make the right choice.