When you start to look at your financing options this year, no matter what it is for, you need to decide on how long you want the borrowing for. Do you need something just in the short term? Or does it need to be much longer? The question comes down to how much you are borrowing and what you can afford to pay. If it’s long term lending you’re interested in, you’ll want to know how best to do this and what options are there depending on your financial status.
Homeowner Loans
If you own a property, this means you could have access to homeowner loans. Because of the high value of most people’s homes, it gives an opportunity to take out a secured loan so that you can go ahead and redo the kitchen, makeover the garden or plan that extension. The loan rates on homeowner loans can still be high depending on which lender you go with. But if you shop around, you’ll find as this type of loan is fairly competitive, there are many great options to be found. With US mortgage rates dropping recently to 3.64%, it’s a good time to see what’s available.
Your home will be used to guarantee the loan amount, much like your mortgage, and this means you could borrow higher amounts than you would any other way. Of course, taking out any form of secured borrowing should be taken with caution and only used if you really need it. The last thing you want is to put your property at risk just because you wanted to build a conservatory. If done correctly, and at the best available rate, you should find affordable options that you can easily maintain payments for.
Equity Loans
Similar to a homeowner loan, you can take advantage of being a homeowner by releasing equity in your property. The interest will be fixed at the time you agree to the equity release, so you’ll know exactly what you’ll have to pay in charges with this. You can take out a lump sum from the value of your home and essentially pay for what you need without any ‘additional borrowing’. To be able to get a great rate equity loan, you’ll need to be over 55, so, unfortunately, this isn’t an option for younger homeowners. But it is a benefit worth thinking about later in life if you need to supplement your pension or make home improvements without having to go elsewhere for credit.
What You Can Afford & Your Credit Score
For affordability purposes, you should do a full audit of what your income is versus your monthly expenditure. There are many helpful online forms you can use to do this with and will break down entirely what your monthly disposable income actually is. Hopefully, by doing so, you will be left with a positive figure that will cover repayments for a potential loan. You’ll need to include all expenditure in this for the most accurate results. This way you can ensure the figure you have for disposable income is as close as possible. A long term loans direct lender can then look to approve your application with confidence with proven affordability.
Once you know what you can afford, you should check your credit report. It’s always best to check your credit score before you apply for lending. Not only will this save you having a declined application if your score was bad and you were unaware, but it will also help guide you on how to improve it. You should take the time to rectify any issues on your credit file. Some may take longer than others, but things such as incorrect information like an address can make a big difference.
Savings
With all the lending options available to you, it may be easy to forget about your savings. Not only can you get great rates on additional lending, but you can also benefit from better rates on your savings too. In an ideal world, you’ll have enough savings to purchase all the things you want to achieve this year. Of course, the reality is many people may only have a small amount they can save each month. That’s why it’s important to not forget about your savings account. You should regularly check if your savings are in the right place. You may be able to apply for a savings account with a higher savings rate. If they can’t, there are plenty of other companies willing to give you a higher rate on a savings account. Many people would have identified increasing their savings as a priority this year, whether that’s personal savings or through pension contributions. A good credit score should enable you to access the best savings products available. We encourage that you place focus on saving what you can whilst enjoying the benefits of finding loans that will work for you. If you can do both successfully this year, you’ll find 2020 will be a prosperous one for your finances in the long term.
