Cheap Home Loans are not Available as a Readymade Potion; Need
to Work to Make Them Happen
For most people in the UK, home loans necessarily connote cheap
finance. How can they not get cheaper finance when they have
offered lien on home to loan provider? Loan providers however
devise ways to overcharge borrowers who are not much conversant
with the ways of the financial market. Interest is generally
charged on the higher side, and borrowers also have to shell a
larger sum as fees for the services of the lender.
So, does the concept of cheap home loans not exist? Cheap
Home Loans do exist, but not as a rule. Cheap home loans
have to be supplemented with sufficient efforts on the part of
the borrower to make them possible. Though borrowers may not
rest at any stage of the life of the loan and keep an eye on
every cost that is added to the loan, efforts will have to be
primarily made during the planning and decision making stage.
The fate of cheap home loan is largely dependant on the work
done during these two stages.
Every borrower need not be well informed about the rules and
regulations of the financial market. The advice gained from
external sources will be as much helpful as ones personal
knowledge or experience. Among external sources, independent
financial advisors are the most revered. Independent financial
advisors are bound by Financial Services Authority rules to
offer genuine expert advice. Because of the professional and
independent advice that they offer, it will be difficult to
discount their importance.
Home loans are offered against the equity in ones home. Equity
is the approximate value that a house will fetch if sold. For a
more appropriate valuation of equity, all mortgages and loans
secured against home are to be deducted. Equity plays a decisive
role in lowering cost of home loans. Lenders vie to lend to
homeowners with larger home equity because of the potential
safety that they allow. The safety will be in terms of the risk
that a loan venture poses for the lending agency. As potential
risk on home loans can be easily covered through repossession of
the home itself, home loans are termed as low risk ventures.
Accordingly, home loan borrowers are preferred over borrowers of
unsecured loans.
Borrowers need to take maximum benefit of the preference shown
by loan providers. Since, the number of loan providers dealing
in home loans is very large, borrowers can easily compare and
choose lender offering the best package. It is at this stage
that the decision making skills of the borrowers are best
utilised. Though inexpensiveness of home loans will be
preferred, it must not be at the cost of the other virtues.
Personal requirements of the borrower need to be held supreme
during the search process. Thus, a lender who lends at the
lowest APR may not suit the borrower if the amount lent is
inadequate.
Borrowers can draw any amount between