Homeowner Loans

When you are a homeowner more loan options and improved deals become available, as you can secure a loan against your home, creating collateral for the lender. This added security results in lenders offering increased loan amounts and the opportunity to use the value of your home to your advantage by releasing equity and producing additional finance. Homeowner loans are available whether you are employed or self employed. Loan plans are often tailored to reflect your individual circumstances to ensure your loan is a manageable commitment. The capital raised through a homeowner loan can differ significantly as the loan amount depends upon the equity and value of your property and a number of personal factors such as your credit score and proof of income. If you are looking for a substantial loan then an LTV loan plan could be a suitable option.

100% LTV (Loan to Value) Loans

An LTV loan can have lower interest rates compared to other loan types as the loan is secured against your home, providing security to the lender. High LTV loans can be seen to carry risks with the lender and therefore the added security of mortgage insurance may be required. A 100% LTV loan simply means that the size of your current mortgage plus the loan amount required should equal 100% of your property value. Despite the ongoing credit crunch it is still possible to secure a loan with a high LTV.

Second Charge Loans

A second charge loan means a loan that is guaranteed against your home, your mortgage being the first charge on the property. This specific loan is secured against your home like your mortgage, but is independent from your mortgage and has higher interest rates. Just like a mortgage, if you cannot pay it back then the lender can sell your property to get their money back. A second charge loan can be used to release equity from your home and can be used for any purpose.

By: Tom Wilkinson

These past weeks there has been talk in the higher education press about private lenders and state guarantee agencies either withdrawing from the government-subsidized student loan market or refusing to underwrite new loans. These financial institutions cite either a cash crunch or a credit crunch, or reductions in the federal interest subsidy as the reasons for pulling back on such loans.

These are all legitimate reasons for the private financial markets to back out. Student loans were never meant to be a profit center when they were first proposed by the federal government under President Eisenhower. The purposes of student loans are to make college affordable and accessible to anyone who is admitted to college and to help them establish good credit early in the working lives.

When I applied for my first student loan 30 years ago, I could borrow up to $2,500 and I didn’t need to pay an origination fee. Today, the maximum a college freshman can borrow under the subsidized loan program is $3,500; considering inflation it’s a lot less than I could have borrow 30 years ago and covers a much smaller share of the costs! The $2,500 I could borrow in 1978 would have covered more than half the cost of my freshman year at Rutgers. The $3,500 I could borrow today would cover less than a fifth of the freight-assuming I received the full amount after going through a means test!

The federal unsubsidized interest (unsubsidized meaning the borrower or their families pay the interest while the borrower is in school) loans were a creation of the Reagan Administration. They were initially a means of providing loans for graduate and professional school students who could not qualify for the maximum amounts for subsidized interest loans.

During the go-go Eighties, a graduate or professional student could borrow up to $5,000 a year from the subsidized interest loan program – but had to prove financial independence or go through a means test along with their parents. Then they had to turn to the unsubsidized loans – popularly known as PLUS loans to make up the difference. Back in those days, the subsidized loan and the unsubsidized loan together with some employment could pay almost the full freight.

That’s not the case today.

It’s easy to blame the colleges; their administrations make the tuition decisions, not the federal government. But they are just like other businesses that must deal with escalating health care costs (tenured college faculty are more senior level workforce than most government agencies and private corporations); fuel prices (larger schools own and operate as much housing as some medium and large-sized cities) and pensions.

There will need to be a major redesign of the student loan programs in the next presidential administration not only to reconsider outdated borrowing limits, but also the means tests and multiple government loan programs with their own set of regulations and bureaucracies. In an ideal society, students should not end their higher education owing more than their first year’s salary in their chosen field.

That’s a lofty ideal, but one worth reaching for.

By: Stuart Nachbar