Home Loans
Home Loans can be used to help finance your energy-efficient solutions as they can offer great flexibility and good rates.
Below you will find more information about home loans, including the difference between home loans and mortgages and how they can be tailored to support your needs. These options are provided for information only and are not provided as a recommendation.
Financing with a Home Loan
If you're looking to finance energy-efficient upgrades or major renovations and you own your own home, either outright or with a mortgage, you could consider a home loan. Also known as homeowner loans, secured loans, or home equity loans, these loans allow you to borrow against the value of your home, often at lower interest rates compared to other forms of credit like personal loans or credit cards.
What Is a Home Loan?
These loans allow homeowners to borrow money against the value of their home. If you have a mortgage then the amount you can borrow will be a percentage of the remaining "equity" which difference in the value of your home and any outstanding mortgage or borrowing secured against it.
For instance, if your home is worth £200,000 and you owe £100,000 on your mortgage, your equity is £100,000. You can then borrow a percentage of this equity through a home loan, known as the Loan to Value (LTV) ratio. If you borrow £80,000 on a home valued at £100,000, your LTV is 80%.
FAQ's
Every house and every household is different - I'd really recommend taking up the free advice to work out which solutions are best for you.
Andy, Fulford
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Things to Consider
Home Loans can allow homeowners to borrow a larger amount than personal finance options but you should be mindful of the potential costs and risks:
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Variable Interest Rates: Many home loans come with variable interest rates, meaning your monthly payments could fluctuate as the Bank of England adjusts its rates.
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Fees and Charges: Be sure to check for any fees, commissions, or charges for early repayment. These costs can impact the overall cost of borrowing and are often reflected in the Annual Percentage Rate of Charge (APRC).
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Risk to Your Home: Since a home loan is secured against your property, failing to keep up with repayments could result in losing your home.
Seek Professional Advice
Home loans are a relatively new product in the UK and may not be available from all banks. Given the complexity of these products, it's wise to consult a regulated financial adviser to ensure that a home loan is the right choice for your situation.
For more information, explore these resources:
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The Benefits and Risks of a Home Secured Loan
Considering a home secured loan for your home project? Here's a quick overview of the key benefits and risks:
Benefits of a Home Secured Loan
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Flexible Terms: Borrow between £10,000 and £250,000+, with repayment periods from 60 to 300 months, giving you the flexibility to manage your budget.
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Easy Repayments: Your monthly repayments are conveniently deducted via Direct Debit, ensuring consistent and timely payments.
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EPC Discount: Homes with an energy efficiency rating of A or B may qualify for a rate reduction, potentially lowering the cost of your loan.
Risks of a Home Secured Loan
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Secured Debt: Your home is at risk if you don't keep up with repayments, as the loan is secured against your property.
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Variable Interest: Monthly payments could fluctuate if interest rates change, which might impact your budget.
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Credit Score Impact: Late or missed payments can harm your credit score, affecting your ability to borrow in the future.
Final Thought
Before committing to a home secured loan, it's crucial to weigh these benefits and risks. Consulting with a regulated financial adviser can help ensure this option suits your needs and goals.
