In the current economic situation here in the UK, your home is going to be more and more important for your financial planning. For one thing, the housing market has tightened. The Royal Institution of Chartered Surveyors recently did a survey of UK housing confidence and found it has dropped to a 30 year low.
"Policy-makers, such as the Bank of England and the Treasury, all want to see our surveys in advance of them being published", the Institution's chief economist, Simon Rubinsohn said. Which indicates the accuracy of this survey and the tightness of the housing market.
Housing market woes
But this survey report matches the findings of other inquiries. HBOS, for example, Britain's largest mortgage lender, is estimating a 5 percent drop in UK house prices this year. And the latest house price index from Halifax was down 2.5% recently, showing a 1 percent drop in UK property values in the latest quarter. Research consultant, Capital Economic, is going so far as to predict an 8 percent drop in house prices by the end of the year.
In this bleak environment, however, there is good news for those of us who have owned a home for some years. The bankers who have traditionally financed us into homes still need secure investments so they can return profits to their backers. They are actively looking for reliable borrowers. And what could be more reliable than a homeowner with a reasonable income and cash flow?
A home that you have equity in can be a lifeline for you and your family in the economic conditions now enveloping the UK when you get one of those unexpected bills which your income could never cover.
Home ownership is a lifeline
With a home, it is suddenly possible for you to go to your bank, or to one of the many, reliable, non-banking lending institutions in the UK, and borrow money using your home as a guarantee that you will repay the loan.
These secured loans are a convenient, quick and ultra-safe way to find money to do things like add an extra bedroom to better suit your growing family, or get rid of big credit card debt that is eating you in mushrooming interest payments, or pay for an urgent medical operation that the national health can't give you until next year, or give your daughter the lavish wedding she's always dreamed of, or quickly get a new car because your current one has been in a crash.
We all have expenses like these. And if you have a home, you can meet them, with a secured loan. Even in these turbulent economic times.
Average incomes can service these loans
Almost any reasonable lender will look favourably at a loan application that comes from someone who has a few years’ of equity in his home. Obviously you are putting up your home as collateral. So, in theory the lender could sell it from under you if you find you can't meet the repayments. But as long as you have a standard job and a reasonably steady income you'll have the cash flow needed to keep those payments up to date.
A broker is a good idea
When you are looking for a loan, a hard working broker to help you find the most favourable deals. Loan offers are all different. The frequency of the repayment cycles and length of the loan term have a significant effect on how much you end up paying in interest. And it's the brokers who know about this and can track down a good loan agreement. So, look around online for a loan broker as you start meeting lenders and talking about a secured loan.
John Bowles writes general finance and loan articles for the UK Loans Only website at http://www.ukloansonly.co.uk