With the mounting crisis in the finance market, the so called "credit crunch" has had a marked effect on home loans.
A Home Loan is essentially a loan which is secured on your home. It uses the equity in your property as security against the loan, in case of default. You can usually borrow upto £100,000 or more dependant upon the equity available in your property.
Home loans are used for a variety of purposes, debt consolidation being one of the main ones. Home improvements is always a popular reason, especially at present with house prices apparently dropping, more people are spending money on improving their current property. Other reasons include, overseas property, large purchases, starting a business etc.
In the last few months the changes in the home loan market has led to a number of lenders, reducing the loan amounts and the maximum loan to value (LTV) they will go to. Even the lenders that have retained high LTV loans have tightened their criteria, which makes it more difficult to obtain the home loan you may be looking for.It is even more difficult now, if you are self employed or self declaring your income, because this seems to be an area that lenders are especially wary.
If you are employed and have payslips then you are in a better situation because you are considered less of a risk. Even these "status Home Loans" are becoming more difficult to obtain.
The home loan market has and always will be, as any other type of industry, based on demand, and currently we are seeing a reduction in lenders and lending in general, the market will expand in the future when the confidence returns back into this market. At that point when investors and the general money markets see the viability of the Home Loan market then we will see a relaxing of the lenders criteria and an increase of the LTV, to allow more people to obtain the home loan they are looking for.
A good loan company will be able to inform you of the available options and how long the loan will take and what information needs to be obtained, and will keep you informed all along the process, until completion.
By : Alan Reed
