By Kamalkk Kannan
Homeowner loans are a class of secured loans offered by banks and financial establishes in several countries. A secured loan is a loan that can be applied by placing a collateral as a compensation for the money borrowed. By this, if the borrower faces financial problems and doesn't repay his loan in time than his property placed as security would be taken over by the bank.
Secured Homeowner loans are the loans obtained by placing one's own house as security. Even a house with multiple owners can be placed as security with documents signed from co-owners as well. This may apply to cases where a house is co-owned by husband and wife, relatives etc.
Advantages of homeowner loans are manifold. Generally huge amounts can be demanded when house is placed as security. This is because of the fact that value of house would generally increase in future. Since this is a very common type of secured loans available, there is a high level of competition among lenders.
This has significantly reduced the competition levels amongst the financial companies. Especially banks in UK are known for their very low secured loan rates ranging from ten to twelve percentage of the money borrowed.
The prime disadvantage is the amount of risk involved. In case of failed repayments the house may be taken over immediately.Being careful on assessing the value of house placed as security and demanding an adequate loan amount to match the value of security can help a lot in preventing future financial crisis.
Article Source: http://EzineArticles.com/?expert=Kamalkk_KannanBy Kamalkk Kannan
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