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Practical Guide on Loans and Repayments for Homeowners

By Maria

Buying a home is a dream come true. However being a first time homeowner could be a huge responsibility at the same time. Not everyone is adept at managing mortgage responsibility with their current personal as well as financial responsibilities. As a result, the balance on your credit card can rise faster than you ever anticipated. With mounting bills and loan instalments, it can soon become difficult to stay afloat.

A lot of borrowers opt for bad credit payday loans as they face cash lapses. However payday loans should be used selectively. Being expensive cash advance option, these loans are not perfect for every cash requirement.

Know when to apply for payday loans:

As the name suggests payday loans should be strictly used as a short term cash gap loan before your salary cheque. These can serve as a means to get out of temporary cash lapses without a credit check or loan security. They can help you come out of a sticky situation without any hassle. Let’s discuss some of the situations below:

Emergencies/Accidents

Emergencies are always unexpected. We can never time out a crisis situation. For instance, if your neighbour’s tree falls on your roof or your car breaks down in the middle of the road. Are you prepared to manage the crisis situation? Herein one needs to keep mental as well as financial balance to deal with the situation.

When you have paid a down payment for your home or are also paying for your student loan, it is likely that you do not have a surplus left for unexpected emergency situation like this. Herein opting for a payday loan for 15 days can help you meet the crisis without a hassle. This way you would not need to ask your peers or relatives for any amount.

Payday loans are ideal for situation where you need funds for a very short period of time. As you receive your pay cheque you can use it to repay loan. Thus using payday loan you can get the timely repair done on time.

Urgent household needs

Likewise, you can use these cash advance loans for sudden household emergences like boiler installation or plumbing repairs. However it is important to apply for small loans as payday loans. Or, it would add to your debt stress.

Cash gaps

Besides the emergencies, many people use payday loans for good causes too. Sometimes, you have too many purchases lined up in a single month; say, due to a family wedding or a birthday bash of your kid. When you are not making big numbers every month, it is fine to use additional funding sources before the end of month. A majority of borrowers in the UK apply for payday loans up to £500 in the last 1 or 2 week(s). By keeping limited debt burden they can better manage repayments with their current salary.

When you need high ticket loans…

However payday loans are not high ticket loans. In case you need huge amount to stay afloat you must better discuss your situation with an industry expert and look for cheaper alternatives to borrow. You can contact a loan broker online and avail tailored advice right in your inbox.

Home improvement

One of the common mistakes incurred by homeowners is to not assess the burden of home improvement while calculating their financial obligation. A home is an asset and it requires periodic repair and management.

Home improvements could literally be limitless. It is important to plan out a budget before you begin home repair projects. Generally a new home requires minor home improvement over the period of two to three years. By this time you must have paid out 20-30 percent of home loan. Using this home equity you can avail a homeowner loan at affordable price. As a rule of thumb you can apply up to 80 percent LTV of home equity you own.

For example: Say you borrowed a home worth £300000 with mortgage loan of £270000 for 10 years. After three years you have paid £71000 which makes you owner of £101000 home equity. Despite your current debts or low score, you can borrow an additional home equity loan up to £70000 to £80000.

Thus secured homeowner loans are one of the convenient ways to fund home improvement or debt consolidation loans. As these are secured loans you get swift access to funds. You do not need a guarantor or credit check. The loan is absolutely independent of your previous mortgage.

Are there any risks involved?


There is no restriction on the use of funds and you can compare and choose the most affordable loan. However being a secured loan as you raise the home equity loan, it is important to ensure timely repayment. For, nonpayment can risk the ownership of your home equity. The lender can challenge your assets for claim.

Herein it is important to have a quick checklist before applying for a homeowner loan:

1. Do not borrow more than what you need

Irrespective of limit availability, it is important to borrow only for the amount you need. You must carefully assess the value of expenses you intend to use funds for. Wrong estimates of expenses can make things difficult for you later on.

A debt is a debt and should always be used for essential needs. You must be careful to not use funds for trivial purpose.

2. Have a clear plan to use the funds

As important it is to avail appropriate funds as is to ensure their processing. You must clearly delineate the use of funds. It is important to ensure that the funds are used for the required purpose only. Manyatimes we fail to manage the expenses which can create shortfall later on. With poor credit it is important to not indulge in such situation.

3. Save everyday and prepare for prepayment

In fact it is always advisable to save everyday when you have home equity loan. You should not only try to repay your loan on time, you must build a reserve fund at the same time. A reserve fund protects you against temporary cash troubles. Who knows you may use it to prepay the loan later on!

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