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Home a Loan
The number of homeowners taking out secured loans is set to slow down over the next five years according to analysts at Datamonitor. Over the past five years the market for secured loans has increased by over 50%, however predictions indicate that loans secured against property will only increase at a rate of 5.3% a year up to 2009. Last year, £32.6bn was borrowed by homeowners secured against the value of their property but according to Datamonitor this will rise to £35.4bn a year by 2009. Datamonitor stated that the slowing demand for loans reflected a public perception of an ongoing "soft landing" for the UK housing market. Maya Imberg of Datamonitor said ?The rapid growth rates the secured lending market has enjoyed over the last five years are set to cool?
The slowing in house price inflation that has been experienced over the past few months is seen by analysts to have discouraged homeowners from taking out loans secured against the increased value of their homes. Secured loans are normally seen as a sensible way to borrow for certain expensive items, such as home improvements, due to the higher borrowing limits and cheaper interest rates that are generally charged compared with an unsecured loan.
In the past it has been common to see that while the value of homes has risen, many families have increased their mortgage borrowing to release money tied up in the property, to pay off other debts or make expensive purchases. This mortgage equity withdrawal generated approximately £150 billion for homeowners? between 2001 and 2004. The recent perceptions that a return to the risks of negative equity occurring as a result of buyers needing to obtain increasingly large initial mortgages to purchase property combined with the slowing down in house prices, has caused many to be more cautious in their borrowing.
In July 2005, the total UK personal debt stood at £1,114 billion and has been spiraling out of control at a rate of £1m every four minutes. The number of bankruptcy applications and home repossessions is also on the increase.
According to mortgage-arrears counselors White Horse Mortgage Services, the main reasons for people falling behind on their loan repayment include:
The slowing in house price inflation that has been experienced over the past few months is seen by analysts to have discouraged homeowners from taking out loans secured against the increased value of their homes. Secured loans are normally seen as a sensible way to borrow for certain expensive items, such as home improvements, due to the higher borrowing limits and cheaper interest rates that are generally charged compared with an unsecured loan.
In the past it has been common to see that while the value of homes has risen, many families have increased their mortgage borrowing to release money tied up in the property, to pay off other debts or make expensive purchases. This mortgage equity withdrawal generated approximately £150 billion for homeowners? between 2001 and 2004. The recent perceptions that a return to the risks of negative equity occurring as a result of buyers needing to obtain increasingly large initial mortgages to purchase property combined with the slowing down in house prices, has caused many to be more cautious in their borrowing.
In July 2005, the total UK personal debt stood at £1,114 billion and has been spiraling out of control at a rate of £1m every four minutes. The number of bankruptcy applications and home repossessions is also on the increase.
According to mortgage-arrears counselors White Horse Mortgage Services, the main reasons for people falling behind on their loan repayment include:
- Absorbing: a reduced income such as loss of overtime 26%
- Financial mismanagement: 25%
- Redundancy and unemployment: 14%
- Accident, sickness or injury: 12%
- Relationship breakdown: 7%
- Over-indebtedness: 5%
- Others: 11%
posted by Bruce Wayne at 8:29 AM
Home a Loan
1 Comments:
Refinance home loan lenders are eager to lend money to any individual regardless of credit as long as the homeowner has a fair amount of equity in the home and the home itself is in a condition that can be resold. Refinance home loans are different than a second mortgage or line of credit in that the proceeds from the loan disbursement first pay off the original mortgage loan. The remainder of the refinance home loan proceeds leaves the homeowner to spend the money as they wish. Typically, refinance home loans carry lower interest rates than purchase mortgages.
For a homeowner to obtain a refinance home loan, it is in their best interest to get a loan with an interest rate lower than the loan they already posses. Some borrowers prefer to re-extend their payment length back to 30 years, others prefer to use refinance home loans for the existing time left on their original loan. In order to determine the best deal throughout the life of both loans, in depth calculations will have to be done. Many Internet websites have interest calculators to make it easier for homeowners to determine how much interest is going to the lender before deciding if a refinance home loan is the most beneficial option.
Once a decision has been made to apply for a refinance home loan, the borrower must provide the lender with their social security number for a credit check. A credit report score directly determines the interest rate. It is recommended that before applying for various refinance home loans, the borrower receives a copy of his/her credit report from each of the three credit reporting agencies. If the credit score is low, then expect the interest rate on the refinance home loan to be high. If the credit score is high, then expect the interest rate on the refinance home loan to be low. Sometimes, easy measures can be taken to lift the credit scores. A credit report can look drastically different in only 30 days.
Refinance home loans gain extreme popularity when the interest rates drop nationally. It is an opportunity for a homeowner to save thousands of dollars in interest over the life of the loan, and to save hundreds of dollars in interest every month. Some homeowners use the refinance home loan to pay off their existing loan, and pocket the money for college, home improvement, or that vacation they have always wanted to take. The option to refinance a home loan is a great idea if a homeowner can lower an interest rate on such a large loan that extends for such a long period of time. It is no wonder there are many lenders out there that are advertising for individuals to consider getting a refinance home loan.
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