There are huge celebrations on whether it is wise to draw secured homeowners loans with bad credit or not. While one school of thought favours the low cost factor of the secured loans, the other school binges on benefits of unsecured loans. The idea of no influence on the ownership of your home on non repayment is what amuses the latter faction of people in favour of unsecured loans for poor credit.
Let’s explore in length about the two forms of borrowing and try to reach at a definitive answer for anyone who seeks homeowner loans to get rid of poor credit situation.
Being a person with home equity you enjoy following benefits as a borrower:
- Your loan application is preferred over the one who lives on rent.
- You get to borrow fatter loans with lesser hassles.
- You get better rate of interest for homeowner loans.
- You get more freedom in choosing the loan repayment plan according to your credit situation.
When you decide to use home equity for drawing a loan, you are eligible to draw up to Loan to Value of current home equity. These loans are raised by those who have long outstanding bad debts or have bigger home improvement projects to fund. By incurring a home improvement, you would increase worth of your property and would thus diminish the burden of loan on your shoulders.
By raising loan against property you share the risk associated with your loan and thus you get better rate of interest. However there is a cliché attached here. If you fail to repay the loan, the lenders can challenge the ownership of your home and you may lose you property rights.
Unsecured homeowner loans
Those who do not want to take any risk, opt for unsecured personal loans in UK. You can use the amount for any of the purposes discussed above. However the rate of loan would be higher and you would be spending too much on the interest amount.
Secured or Unsecured?
Knowing the pros and cons of both formats of loans, you should assess your credit situation so as to make up your mind. You can also consider availing help of a professional financial advisor such as a loan broker. They would not only search the appropriate deals in the UK but would also guide you on making a wise decision.
Before making up the mind, you should always have a repayment plan in place. You must calculate how much you could save every month. The more comfortable you are paying out the loan installments, the more likely it is to repay the loan on time.
Be it an unsecured loan or a secured one, when you borrow for mending bad credit situation it is important to stick to your repayment plan. You should strive hard to ensure timely payments every time.