Secured Loans / Homeowner Loans— The Difference And The Similarity
Secured loans which are also commonly called homeowner loans are not a new concept as homeowner loans were first introduced in their current form about three decades ago and they have always proved popular with homeowners needing finance.
Although some aspects of these loans have remained unchanged over this period but like many other products there have been some changes.
The way that homeowner loans function first of all is that they need to be secured on the equity of a property and this is why they have the name secured loans or homeowner loans.
Equity is what is left when the mortgage balance is deducted from what they property is valued at, and as the property is owner occupied is the reason that the name for this financial product is homeowner loans or secured loans.
Nowadays the maximum equity required for obtaining secured loans or homeowner loans is 70% for the self employed and 80% for those in employment.
Before the recession secured loans were available at not only 90% or 95% but were granted up to 125% which meant that homeowner loans were available at up to 25% more than the property was worth , and this meant that although these are supposedly secured loans on a 125% plan there was little or no security.
One big change therefore since secured loans were introduced until now is the equity margins acceptable.
Another major change is in the number of secured loan lenders offering these loans
At the inception there was only two lenders worth considering but by the start of the credit crunch the homeowner loan market was settled with teens of the same secured loan lenders offering this product, but the majority of them have gone out of business.
An additional change is in the difference in income proof needed for self employed borrowers who now require accounts instead of the self certification of earnings as in the past.
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