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A home loan is a secured loan, i.e., the loan seeker’s home serves as collateral against the loan amount. However, along with other loan papers, the borrower needs to sign an agreement too, which gives the lender the right over the house.
To get a free hold over the house, the borrower has to wait for his repayment term to end successfully. Also, in case of repeated defaults – accidental, repeated or intentional – and non-payment, the lender can take possession of the house and resell it to recover his money.
Typically, a home loan can be repaid over a period of 10 to 30 years. And, one’s monthly instalment usually comprises of – principle + interest and PPI (Payment Protection Insurance) premium, if applicable.
The UK loan market offers a variety of home loans in the form of diverse repayment plans:
According to a latest market report, fixed rate deals are gaining popularity, as first time buyers buckle down under the prospect of higher interest rates. In January 2007, nearly 85% of the first-time buyers chose a fixed rate deal – the highest figure ever recorded – whereas the rest stood at just over 70%. The average interest rate of a fixed rate loan in January 2007 was 5.27%, up from 5.23% in December 2006, whereas the average of a variable-rate product reached 5.54%, up from 5.36% in December. Hence, more and more home loan borrowers – especially the first-time buyers – are opting for a fixed rate deal to fix their monthly loan payments, as it allows them to plan ahead with confidence.
A loan application process should always begin with thorough knowledge of one’s:
A
home loan
application is no different. Previously, building societies were the most approachable source of financing. However, nowadays, the loan market offers many more options, both in terms of lenders and home loan products.
One can find hundreds of home loan packages in the market. Choosing the right one can be a daunting experience. But, the online presence of innumerable lenders has made the entire business of lending easy and comprehensible, and credit shopping meaningful.
About the Author:
The author is a business writer specializing in finance and credit products and has written authoritative articles on the finance industry. She has done masters in Business Administration and is currently assisting Shakespeare finance as a finance specialist. For more information please visit at http://www.shakespearefinance.co.uk/
Article Source: ArticlesBase.com – Home Loan – be a Proud Homeowner
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