The Homeowner Loan Before And During The Credit Crunch.
Article by lizmoir
The homeowner loan is a type of secured loan which must be secured against a property, and preferably your own residential owner occupied property.You can also secure a homeowner loan against a buy to let property which is owned by you but is rented out. However now as in the past, it is more complicated to obtain a homeowner loan in this way, and the equity margin which a homeowner loan lender will take into account is less favourable if it is a buy to let property.Even in the hay day of the homeowner loan, and oh how long ago it all seems now,the maximum LTV was 60% LTV or very occasionally 65%. This meant that if your buy to let property was worth £200,000 and your outstanding mortgage balance was £120,000. the maximum loan was £20,000.Now many secured homeowner loan lenders are reluctant or just down right refuse to advance a secured loan as a second charge on a buy to let, and who can really blame them? Before the credit crunch this property market was booming and city centre flats and marina and harbour side developments specifically aimed at the buy to let buyers were being snapped up.Professional property developers and investors some of whom in the 50′s and 60′s would have been regarded as spivs were readily, and in retrospect too readily, granted loans of millions of pounds by mortgage lenders such as HBOS whose reckless lending to such individuals helped precipitate the crisis they have found themself in during this current recession.Now many of these once desirable residences are standing empty, aand the fall in the value of these types of properties has fallen even more than other sectors of the UK property market. Vast areas of these flats are now standing like depressing ghost towns.The homeowner loan which is secured on homeowner owned propery has undergone changes as well. Before the recession there was such a product as the 125% equity homeowner loan. This meant that if your propery was valued at £220,000 you could add 25% to this, and in this case £55,000. Therefore if your mortgage balance was £195,000, you could theoretically borrow up to £60,000, depending of course on income and status. Such homeowner loan lenders as Paragon, EPF, and First Plus dealt in this homeowner loan, with the Cardiff based First Plus being the first to introduce this loan, and in fact specialized in it.First Plus has now ceased trading, as has EPF. Paragon who are from Solihull in The Midlands are simply ticking over due to lack of ability to obtain funding and are only granting further advances to existing customers, and are not advancing any new homeowner loans.Other secured loan lenders have totally withdrawn from the market, such as FNB owned by the once all important General Motors, and Future Mortgages who were part of Citi Group. The latter suffered so severely through their involvement in the sub prime mortgage market in America which helped precipitate the global economic crisis that it was no longer feasible to continue with their UK homeowner loans section.Future Mortgages did have pretty lax underwriting and accepted self declarations of earnings for both employed and self employed applicants with little or no back up proof, and these homeowner loans were at up to 90% LTV.Now self certification of income is a thing of the past, and as such many self employed people are finding it extremly difficult if not almost impossible to obtain a homeowner loan or any other kind of finance.Many homeowner loans brokers have also gone to the wall with probably the Uk’s leading secured loan broker, Loans.Co.UK being one of the first victims of the recession. They were not even saved by being bought over by MBNA. Many smaller fry have suffered the same fate.The homeowner loan lenders who are still trading are underwring less than 80% of the business that they were writing prior to the recession biting, and their criteria has tightened up enormously. The maximum loan to value for employed applicants is 80%, and with lenders such as Nemo the maximum LTV is 70% for the employed, and self employed applicants are not accepted any longer which is a major change from in the past when Nemo granted homeowner loans of up to 100% LTV to the self employed.Yes the pre and post credit crunch homeowner loan has certainly undergone significant changes.
About the Author
Liz is an experienced homeowner loans and secured loan underwriter with Champion Finance.
The Best Steps to Have the Home Owner Loans There are times when we need to find support for our current financial situation by getting a loan. There are several ways that you need to do to get the secured home owner loans. •First, you need to get the copy on your credit report. •Make sure that you have the excellent credit score so that you will be able to get reduced rates on the home owner loans. •You can get the copy from the free copy that is freely offered yearly on the internet. •You can also get it by writing proposal letter to the major credit bureaus. Before applying the home owner loans, you need to repair the negative reports on the copy of your credit reports. If there are mistakes that are possibly occurred in the report, you need to make clarification by asking the lenders respectfully by the chance that they made some mistakes. After that, to get the home owner loans you also need to have your home appraises because the home will be the security on the home owner loans. When you go to the financial institutions that will help you to get the home owner loans, you must bring this appraisal. Getting informed from the local financial institution is one of the options that you can do to have the home owner loans. Speaking to the representative of the local financial institution is usually the first thing that you need to do to have the home owner loans. You need to explain to them about the type of loan that you need, which is the home owner loans. Moreover, he …