Home Loans - Right Approach to Become a Homeowner By Daniel Louis
Each one of us wishes to possess a home of our own. With some pounds in your savings accounts, it won't be possible to purchase a house that requires a big investment. If you dream to own a home, home loans are the best way to finance your dream. Home loans are offered against the equity in ones home. Equity can be defined as the value of the home after deducting outstanding mortgage amounts and other loans. Lenders take various factors into consideration while calculating the home equity such as location of the home, the structure etc. The loan will be secured on the borrower's home and the transaction will not impact existing mortgage in any way. A home loan is basically taken to purchase or to construct a new house. Borrowers can also use it to make home improvements, consolidating their existing debts, to buy a luxurious car or for any other personal purpose. The loan proceeds of a home loan can supplement both mortgage and secured loans. Homeowners can put their existing house or real estate as a collateral to get finance to purchase a new house. However, if you are a tenant you can put the new house as a collateral to get a home loan. There are various benefits attached with the home loan. Home loans offer larger amount loan with a longer repayment term. Home loans offer you the opportunity to borrow a loan for any amount ranging from ÂŁ3000 to ÂŁ500,000. Home loans can be repaid over a period of 5 to 25 years depending on the amount you borrow. Home loans cater to UK residents with different loan options, which make it easier for borrowers to repay the interest on the loan in the most comfortable and convenient manner. Annual percentage rate or APR is the term used to denote the rate of interest. Home loans give borrowers the option to pay either fixed interest rate or adjustable rate interest rate on the money borrowed. Fixed interest rate option implies that interest rate will remain the same throughout the life of the loan. While an adjustable interest rate would imply that the rate of interest would change periodically with the corresponding fluctuations in an index, with which it is attached. This interest rate is also known as variable rate home loan. A borrower can also opt for interest-only loan option. An interest-only loan gives borrower the opportunity of paying just the interest or the interest and as much principal as he wants in any given