A home loan is simply a loan which is secured against the equity in your home – which means that it’s also often known as a secured loan. This means that if you fail to repay the loan, the lender could repossess your home. Home loans have some risks to be aware of, but they can be a useful borrowing option for people who have been turned down for a conventional unsecured personal loan and who own their own home. Home loans are also often available in higher amounts than personal loans, because by securing the loan against your home the lender is taking on less risk. Use the table below to compare some of the best home loan rates available:
What are the advantages of home loans?
- Lower rate of interest – You will normally pay a lower interest rate than with a personal loan because the loan is secured against your home.
- Longer repayment period – home loans may allow you to make payments over a longer time period, which can be helpful for budgeting.
- Borrow more – some home loan providers will allow you to borrow significantly more than is usually available via personal loans
What are the disadvantages of home loans?
- Risk to your home – Your home is secured on the loan, so you could lose your home if you cannot keep up your repayments. It is very important to make sure that a home loan is the right choice for you before proceeding with this type of borrowing – speak to an independent financial adviser if you are in any doubt about the suitability of this type of loan for your circumstances.
- Potential for a higher repayment overall – It’s important to be aware that the interest accrued over the longer time period could mean you end up paying more overall for the loan.
Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it. If you are at all unsure of the suitability of a particular product for your circumstances you should seek independent financial advice.