People say that you are rich because you own a house in the
heart of city. With rising property prices, you are becoming
richer every day. However, you are a rich man only on papers.
All your capital is tied up in the house. To have some money at
your disposal, the only option you have is to sell your house.
This is not a good idea. Once you sell your house, you might not
be able to buy a new house. Since the house prices are rising,
it has become very difficult to buy a new house. At the same
time, you got to have some money to spend on various items. Many
times, you need money for expenses that are over and above your
regular expenditure. Lenders offer unsecured loans
for these situations, but at a very high rate of
interest. Besides, there are several other disadvantages of
unsecured loans. Instead of taking out an unsecured loan, you
can use your house to raise some money. This can be done by
taking out a homeowner loan. A homeowner loan will help
you release the equity that is tied up in your house. You can
use this money for any purpose you want. Let us discuss on the
negative aspects of homeowner loans. A homeowner loan
is secured against the borrower's house. If the borrower fails
to repay the loan, the house may be repossessed by the lender.
According to an estimate, house repossessions are on a rise in
the UK. As many as 5,630 houses were repossessed in the second
half of 2005 as compared to 4,620 in the first half. There was
an increase of 70% in the total number of repossessions in 2005
as compared to 2004.
Therefore, you should go for a homeowner loan only when
you are confident that you will be able to repay the loan as per
the loan terms. If you do not have a regular income or if the
amount of monthly installments exceeds your monthly income,
avoid taking out a homeowner loan. Think carefully before
applying for a homeowner loan.
About the author:
The author is a business writer specializing in finance and
credit products and has written authoritative articles on the
finance industry. He has done his masters in Business
Administration and is currently assisting Shakespeare Finance as
a finance specialist. for more information visit our site
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