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Home loan

Firstly, there is no difference between a home loan and a homeowner's loan.

Home loans are generally available to individuals who already own their home and have a mortgage. It allows them to borrow more money because the lender can use the home as security against the loan.

A home loan allows you to borrow against the equity of your home and like most secured loans, a home loan is considered to be less of a risk to the lender which in turn helps to keep your interest rate lower than you would normally pay on a personal or unsecured loan. And you will normally be able to borrow more money.

There are some negatives to home loans; firstly, your monthly payments may be less, because you are paying over a longer period but that means you are paying interest for longer as well which pushes the overall cost of your loan up. As the loan is secured on your property you could lose your house if you cannot afford repayments. Because you can borrow so much money (up to £100,000) you could be tempted to borrow more than you need!

However there are many positives to having a home loan and you can borrow a lot of money and pay lower interest rates which can generally be a useful solution for consolidating debts, funding a major purchase or paying for home improvements.

As with any loan, take your time in deciding about what loan to take out and make sure you can afford the repayments.

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