Most people dream of owning their own home one day but property can be quite pricey so many people rely on home loans to make the dream of owning their own home come true.

Before you start searching for your ideal home, you will need to apply for a home loan.

There are many lenders that offer home loans and knowing which type of home loan is best for your needs and how a down payment will affect the overall cost of your loan are all critically important things to consider.

Types of home loans in the UK

There are many different types of home loans that you can apply for in the UK and each of these have their own set of pros and cons.

Variable rate home loans

The most popular type of home loan is a variable home loan this means that the interest rate is variable and be affected by the prime interest rate. If the rate goes down you will save money, but if the rate increases then you will be charged more.

Fixed or capped rate home loans

A capped-rate home loan lets you benefit from rates going down but if the prime rate increases then your loan won’t be affected as you will only pay the capped interest rate. Although many people opt for this option in order to save money, this is not always the case and when the market improves and the interest rates drop you will not be able to benefit from this.

First-time home buyers loans in the UK

If you are applying for a home loan for the first time you may benefit from a first-time buyers home loan. This type of loan is perfect for a young couple just starting out as the bank or lender covers 100% of the purchase price and includes fees such as transfer and registration costs.

A fixed rate home loan has a fixed interest rate for the first 1 or 2 years this means the loan won’t be affected positively or negatively by the prime interest rate. A reducing loan or step-down loan has a decreasing interest rate that decreases every 6 months.

Why you should consider applying for a home loan

Home loans were designed in order to make the cost of owning property more affordable. As lenders want to help you purchase your dream home these loans are very affordable and come at a very low interest rate.

If you are in the position to offer an asset as collateral or put down a large down payment you could qualify for an even better interest rate and more favourable loan terms. Interest rates on home loans are lower than any other type of loan.

Using a bond originator to apply for a home loan

There are many advantages to applying for your online home loan using a bond originator. Complete one simple application form and apply at all the leading banks without affecting your credit score.

Easily compare the different options then apply online for a home loan. It’s up to you to decide which one you would like to proceed with.

The bond originator will collect all the necessary documentation that you need to apply for an online home loan and will ensure that the process runs smoothly. Applying online for a home loan means that the lender can negotiate a better interest rate on your behalf and the service is completely free.

Can you repay your home loan early?

Lenders encourage you to make as many payments as possible and will never charge you penalty fees for paying off your loan early.

Take advantage of the balance transfer facility by finding a better deal for an online home loan to save even more money. Online home loan applications make it much easier for everyone to afford to own their own property.

Instalments for your online home loan can be arranged to suit your budget.

Advantages of applying for a home loan online include:

  • Makes it easier for everyone to afford to buy a home
  • Your property can be used as a cost-effective way to borrow money in the future
  • Interest rates on online home loans are lower than any other loan type
  • If you have an asset or down payment it will be easy to have your loan application approved
  • Some options offer a redraw facility
  • Take advantage of the repayment holiday

How home loan redraw facilities work

Once you have started making payments on your online home loan you will have access to your redraw facility. This allows you to redraw funds from the account to pay for extra expenses such as home renovations.

There is a limit on the amount that you can redraw from the account but as you pay off the loan this amount will become available again in a revolving loan. Some lender may charge a small extra fee for this service.

Give yourself a break with a repayment holiday

A home loan is a long term commitment that sometimes stretches over a 30 year period, for this reason many lenders offer a repayment holiday. Once you have paid a portion of your online home loan payments you will be offered a repayment holiday. This is a payment break from paying your online home loan for between 1 and 6 months.

This option is great if you need to go on maternity leave, are in the process of changing jobs or suffer from an illness or unexpected injury.

To give yourself peace of mind that your online home loan will be covered should something happen to you. It is advisable to apply for online home loan insurance.

Top up your online home loan

This option is similar to the redraw facility and allows you to borrow money against your property in a revolving loan. Borrowing money in this manner is much cheaper than a personal loan and you will be charged a much lower interest rate.

Apply online for a home loan using the online home loan application form to find out how much you would qualify for and what type of online home loan will best suit your requirements.

Before you decide to apply for a home loan you should:

  • Know exactly what type of home loan you require
  • Understand the types of online home loans available
  • Raise your credit score as much as possible
  • Consider how much you earn
  • Make sure you take into consideration any debt you may have
  • How much money you have to put down as a down payment
  • Add all costs including closing costs

Use the online loan application to apply for a home loan and make sure that you get the best home loan available for your needs.