£100,000 Home Loan
Many people need to borrow money to buy or improve their property.
Depending on your location, a £100,000 home loan may be enough to buy a small property or carry out some home improvements to a larger property you already own or perhaps one in an ‘expensive city’ like London.
This article looks at several points, including how to get a £100,000 homeowner loan.
Can I Get A £100,000 Home Loan?
On this page, we are looking at two types of home loans.
The first is a mortgage to buy a property, and the second is a second mortgage where you already own a property and require £100,000, maybe to carry out some improvements or to consolidate your current debts.
When you buy a property, most people need to borrow some money to allow them to complete the purchase of the property. Taking Bristol as an example, according to Rightmove, the average property price over the last year was £386,827. Very few people have that amount in their bank account, meaning that most people would need a mortgage to help them buy a property.
You should be able to get a first mortgage to buy a property subject to your age, income, credit score, and the amount of deposit you have to put into the transaction.
Generally speaking, the bigger your deposit, the lower the interest rate you pay. This is because there is less risk to the lender if you default on the loan, and the lender has to repossess the property.
If you are buying your first property, you are known as a first-time buyer. Usually, a lender would require you to put in a deposit of at least 5%. This is considered a low deposit, and you would pay a considerably higher interest rate than if you put in a 40% deposit.
With a second mortgage, you must already own a property and have a mortgage secured against it. A second mortgage lender sits behind a first charge lender, and if either lender has to take possession of the property, the first mortgage lender will be repaid first from the sale proceeds.
If property prices reduce since you took out the second mortgage, there may be a shortfall from the sale proceeds, and the second mortgage lender may receive only some of the monies owed. To reflect the higher risk to the second charge lenders, interest rates in the second mortgage market are considerably higher than first mortgage rates.
An excellent way to find the best deal available to you, whether you’re looking for a first or second mortgage, is to speak to a reputable mortgage adviser qualified with a CeMAP (Certificate in Mortgage Advice and Practice) who will have access to hundreds of mortgage products.
How Much Will A £100,000 Loan Cost?
The cost of a loan will depend on several factors, including:
Whether you need a first-charge mortgage or a second-charge mortgage. The interest rate on a second charge mortgage is considerably more than on a first charge.
The fees associated with second mortgages are considerably higher than first mortgages. To understand the charges, it would be best to look closely at any mortgage illustration.
With a first-charge mortgage, you will likely incur legal costs - your broker should be able to provide details on the cost. With most second-charge mortgages or secured loans, as often referred to, there are no legal costs. The broker often covers these costs with the fee that they charge. These costs will include getting office copies from the Land Registry and obtaining consent from your first mortgage lender when required.
Another potential cost is a valuation fee. While some lenders are starting to use automated valuations, some lenders want an internal valuation carried out. This is typically the case if the loan size is considered significant or the deposit provided for a purchase is small.
Your credit score - whatever type of finance you require, your credit history will affect your interest rate. A bad credit score, perhaps because of missed credit cards or loan repayments, will result in you paying a higher interest rate, therefore adding to the loan cost. A good credit score should result in you being offered a low, competitive interest rate. The better your credit rating, the lower the interest rate. You can check your credit score by applying to one of the three leading credit reference agencies - Experian, Equifax, or TransUnion.
The loan-to-value (LTV) will also affect the cost. If you are looking to borrow up to a high percentage of the value of your property, then the higher the risk to the lender and the higher the rate you pay.
There are a couple of ways to establish the cost of a £100,000 loan:
Use an online comparison site to compare loans or a site with loan calculators. There are numerous online comparison sites, whether looking for a £100,000 first mortgage or a second mortgage. These sites should give you an indication of the cost. They may conduct a soft credit search, which will not affect your credit score should you not proceed with the application.
While many comparison sites offer unsecured loans, it's doubtful that you will qualify for a £100,000 loan. In addition, loan terms are usually restricted to a maximum period of seven years, making the monthly repayment unaffordable.
To approach a qualified mortgage broker for professional advice. A good broker will have access to sourcing software, enabling them to get the best loan rates from hundreds of lenders.
How Do I Get A £100k Loan?
Who you speak to for a £100k loan would depend on what you intend to use the loan for.
For example, if you wanted £100k to expand your business and buy more premises, you might want to speak to your bank. It would also be a good idea to talk to a specialist commercial mortgage broker who could look at other banks and financial institutions to see who could offer the best terms for business loans.
Your commercial broker should have access to several Challenger banks. A Challenger bank is a relatively new type of bank that aims to “challenge” the big four Banks. Most don’t have branch networks; instead, they work on modern online financial practices. These new banks include Monzo, Starling, and Tide. All of these banks are regulated and authorised by the Financial Conduct Authority.
If you want a £100,000 loan, whether it be to buy a property, a further advance to carry out home improvements with your existing lender, or a second charge mortgage to consolidate your debts, it would be advisable to speak to a qualified mortgage broker who holds a minimum of CeMAP (Certificate for Mortgage Advice and Practice).
Applying for a mortgage is easy if you use the services of a good mortgage broker. A good broker will look for the most competitive product with a low annual percentage rate.
Part of the application process will be to see if you can afford the monthly payments. With loan applications, before you apply for a loan, a broker typically asks to see your bank statements as evidence of your income. They will then ask that you complete an expenditure form listing all your outgoings, including your council tax, monthly utility costs, childcare costs, travel costs, socialising costs, etc.
While it is crucial that your broker and lender carry out their affordability calculations, the most important thing is that you feel you can comfortably afford the proposed loan. Remember that all these loans are secured against your home, and if you fail to make the monthly repayments, you could lose your home.
Consider that you may have unexpected costs, such as your car breaking down or your boiler needs fixing. Another consideration is that your income might drop, for example, if you have reduced overtime opportunities or bonuses being cut. Remember that whatever your circumstances, you must repay your loan - defaulting on your repayments may result in you losing possession of your family home.
For expert advice about secured loans, of any amount, including £100,000, contact The Second Mortgage Company team today.