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Are You Looking For The Best Homeowner Loans Deal?
Let over 200 Top UK lenders compete against each other to give you the lowest rate homeowner loans available. Fill out the form below to see if you can get a better deal.
Our service is completely free, you pay nothing and there is no obligation. See how much you can save! |
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NO PAYMENTS for the first 5 months on many loans! |
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You can borrow up to £100,000. |
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Spread your payments out and make them more affordable. Repayment periods from 3-30 years. |
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Arrears, CCJ's or bad credit? No problem - All Accepted. |
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Borrow up to 100% of your home's value. |
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According to a number of surveys, the majority of people who have loans do not know the meaning and implications of their annual percentage rate (APR). But rather than explain the APR rate in detail and bore you with the maths behind the calculations, this article considers a straightforward example of how it works with homeowner loans.
Definition of homeowner loans
These are loans secured against the equity in a property. As a result, they are popular with lenders and borrowers alike: the lenders have the security of knowing that their money is protected by the value of bricks and mortar, and the borrowers can usually have their money at a competitive APR.
The example
Mr and Mrs B are homeowners who decide they want to borrow £15,000. They approach a lender and ask for a secured homeowner loan.
The first quote is as follows.
£15,000 at 6.7% APR over ten years
Monthly repayments: £171.85
The monthly repayment is satisfactory, but Mr and Mrs B also check how much money they will have paid back by the time the loan ends. The figure is £20,622.28. The actual amount of interest is therefore £5,622.28.
Mr and Mrs B ask to compare this against another quote, this time over five years. The lender explains that a five year loan attracts a higher APR and much larger monthly repayments. Nonetheless, Mr and Mrs B request the quote.
£15,000 at 7.4% APR over five years
Monthly repayments £299.86
The repayments and the APR are certainly higher, but when the loan expires, the total that Mr and Mrs B will have paid is £17,991.42. The interest this time is therefore £2,991.42.
The cheaper loan is clearly not the first quote but the second- by £2,630.86.
Obviously, Mr and Mrs B may not be able to afford a monthly repayment of £299.86. But if they can, they will spend less money.
So the moral is simple: always review not just the APR of a potential loan but the overall interest you will pay.
For the best rates its always better to choose secured homeowner loans rather than unsecured ones. |
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