Equity LoansEquity loans enable you to utilise the equity that you have built up in your property for a loan and the money obtained through your equity can be used for any purpose. Loans are available from just £5,000 up to £250,000 with flexible repayment terms to suit your budget. My Sort of Loan customers have obtained millions of pounds in equity loans through our panel of lenders for a variety of reasons such as home enhancements, debt consolidation, a major purchase or even a combination of these and other purposes.
No matter what you require the loan for all of our quotations are free and you will be given all the facts and figures before you decide what to do. Free phone our UK based loan support team for your quick quote on 0800 0159 018 or dial 0330 053 6001 (mobile friendly) alternatively enquire on line by completing our short enquiry form - don`t worry, there is no credit search on this form.
Definition & Example Equity LoanMy sort of loan specialise in arranging these for UK consumers and have access to equity loan plan lenders that can go up to 95% loan to value. Equity loans allow our clients to access the difference between their property value and any outstanding mortgage (plans available whether you have a mortgage or are mortgage free). These come in a variety of formats, such as equity release plans, second mortgages, further advances and homeowner secured loans. Where an equity loan is taken out in a repayment format , i.e. where you borrow the money and pay it back over a suitable time frame at an agreed interest rate, it is often referred to as a secured loan or second mortgage. Where you do not wish to make repayments during your life time then this is known as equity release (providers of these plans work to lower ltv`s).
For a person with a property worth £160,000 and a mortgage of £100,000 their equity is £60,000. At 95% loan to value the maximum a lender would go to on your property would be £152,000 (i.e. 95% of the property value) giving a total of £52,000 potentially available to use for your equity loan (i.e. 95% of the property value less the current mortgage). Our team will walk through the figures for your scenario without obligation.
Advantages Of UK Homeowner Equity Loans
- As the loan is secured on the equity within a property, most lending plans will allow the equity loan to be used for virtually any purpose, including extensions, refinancing credit, home improvements, car purchase, school fees etc.
- With an equity loan secured on your property, the property does not have to be one you live in. If you have an investment property on a buy to let basis or have inherited a property you can utilise this for security.
- UK Equity lenders tend to have more flexibility in lending terms therefore you may be able to obtain finance even if you`ve been refused elsewhere, possibly borrow over a longer term to help with repayments (from 3 to 25 years) or obtain a larger amount of money (up to £250,000).
- Your existing first mortgage will be unaffected by the additional borrowing .This differs from re-mortgages and will allow your existing mortgage to remain in place. However you may wish to consider a re-mortgage alongside an equity loan. For example: If you are paying a higher prevailing interest on your existing mortgage. Therefore professional advice should be sort to confirm if a remortgage is the right option for you. Please tell us if you would like to explore this route.
Alternatives To Equity LoansRemortgaging With New Or Existing Mortgage Provider
One advantage of a remortgage is that it might allow a lower interest rate to be achieved for all your borrowing requirements .If you choose this then consider speaking to a mortgage adviser, who will not only review the interest rate you are paying and multiple mortgage advance plans, they will also consider early repayment charges on your current mortgage deal (which in many cases can remain in place for some years) after the mortgage was taken out and compare any set up fees. We can refer you to a first charge mortgage adviser.
Equity Release Plans
These allow people to borrow money on their home and not need to pay it back until they die or go into a permanent care home. The interest that is not paid during the term is adding to the loan balance, effectively rolling up. You need to be over 55 to look at this option and you may find moving home difficult, so we suggest you take independent advice before taking this on. We do not offer advice on these equity products but may be able to refer you to a firm who will.
Key Criteria For Equity Loan Lenders
- Think about how much money you would like via your loan and what you want it for. If you are thinking about debt consolidation write down what you want to pay off each credit item and get a total you require for the refinancing. If that element is part of a number of goals, add those to the list as well to get a total or if you are just carrying out some home enhancements list the materials and labour costs. The loans can be from £5,000 to £250,000, with different lenders operating within different bands in between these amounts. The key is to borrow only what you need because as we know loans attract interest.
- Consider your equity (the difference between your property value and outstanding mortgage) available in your property. Take your estimated current mortgage figure away from your estimated value (how much you think someone would pay for your house) this will calculate your available equity. Lenders will only lend to a percentage of this home value typically this varies dependant upon various factors. Equity levels allowed vary from 50% to 95% of the value of your property. We will advise what level of equity is available for your scenario.
- Ok, so you know how much you need, what you want it for and approximately how much equity you have, so the next step in getting your equity loan is to either complete the My Sort of Loan enquiry form which will ask you for limited information about your current financial and personal situation, including your marital status, employment status, age etc (no credit search on this form) or if you prefer call our trained loan advisers on 0800 0159 295 and we will run through your options confidentially .
- My Sort of Loan recommends customers shop around to obtain the best deal, but remember by making lots of applications it may mean more credit searches are ultimately done which could impact on your credit score. At My Sort of Loan we only do any searches after you consent to it plus the credit searches we do on behalf of our lenders don`t impact your credit file, as we only carry out a �soft footprint� search which other lenders won`t see. It`s also worth remembering lenders have lots of different criteria and many do not deal with the public directly for new enquiries, therefore if you are seeking a good deal from a selection of lenders we are set up specifically for this.
Are there any upfront fees for the equity loan?You will not be charged loan any upfront fees, even if you decide to cancel your application before your loan completes. Depending on the size of your equity loan the associated fees may be added to your loan although by going for this option interest will be payable on the amount added.
What interest rates can I obtain for my equity loan?As a loan and credit intermediary My Sort of Loan has access to lots of different lenders that cater for different client situations. However, suffice to say if you are up to date with existing credit and your margin of equity if is large, the chances are you will get the better interest rates than if the margin was small. We will find the best rate from our panel for your scenario, we can give you a good idea of what rate may apply to you and the associated repayments following a straightforward telephone call.
- Before you borrow make sure that loan using your equity is really what you want? Remember as with a first charge mortgage your home is at risk home if you find you can`t repay the loan for whatever reason.
- Don`t over stretch yourself. The lender will always look at your income and affordability as part of a proper and sensible lending process, you should also work out what you think you can afford each month. This will allow you to understand how much you can afford to borrow and what loan term to use to keep payments affordable on the amount of money you would like.
- Review and consider if you have sufficient suitable insurances in place to cover the equity loan if something happens. Although the lender doesn`t insist life cover is in place, you may want to make sure your dependants are covered if the worst happens.