Are You Eligible For A Home Improvement Loan?
Kay Brown
Two types of home improvement loan exist; secured loans which are based on the equity in the property and those that require no security at all. When a homeowner has only just purchase the home, they are still able to arrange a loan, subject to their status of course.
If you want a first rate home improvement job carried out with a guarantee then you will need to use professional tradesmen who should also speed the work up a great deal.
Two types of home improvement loan exist; secured loans which are based on the equity in the property and those that require no security at all. A loan that does not require equity allows new homeowners to apply even if they just bought their home. The maximum period for finance without any form of equity can be up to fifteen years.
However, one stipulation for a zero equity finance arrangement is that the combined income of the owners reaches a specified limit but it must not be greater than the limit imposed by the county where they live. The loan process for people applying for a no equity loan is minimal even though the property and type of improvements planned are looked into.
Not everyone wants a home improvement loan that is secured on the property but when the mortgage is small and the house value is high, this might be a good option. There are benefits to arranging a secured loan though as they generally have a lower rate of interest so reducing the monthly payments and although they are relatively hassle free, they are not another mortgage on the property.
This is not an open ended finance agreement and a valuation of your property will be required for a secured loan to be arranged. This calculation is worked out using how much your home is worth, how much is owed, and of course if there are other loans or debts, as these will be included in the calculation.
All these factors will be considered for putting a loan package together for your consideration. Normally a lender will lend to the upper limit of the house valuation but a few lenders go much further and provide loans up to 125 percent of the valuation.
An equity based loan can be risky if you arrange to lend an amount greater than you can comfortably afford so consider this carefully as you may end up handing your beautiful home over to your creditors. So be careful how much money you agree on a home improvement loan and wherever possible only borrow enough to carry out essential repairs.
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