In very simple terms, a homeowner is someone owns a property.
To be a homeowner, you do not have to own the home outright, you can be paying a mortgage on the property.
Homeowner vs. Tenant
The two terms homeowner and tenant are often confused.
As I mentioned above, a homeowner is someone who legally owns a property.
A tenant on the other hand does not own the property. They instead rent the property, either from the homeowner (known as the landlord) or the council.
As a homeowner, you can use your home to earn income by putting it up for rent.
Benefits of being a homeowner
If you’re yet to get on the property ladder, you may be wondering what benefits being a homeowner provides.
Well, recent research from Barclays Bank found that a homeowner will save a massive £194,000 over a fifty-year period versus those who rent. This even takes into account maintenance costs that homeowners will ultimately incur at some stage!
See, providing you choose a fixed-rate mortgage your payments will never increase, whereas rent certainly will. Not only does this save you money in the long-term, but it makes budgeting for the future much, much simpler.
Being a homeowner also provides you with financial stability and security when they decide to retire. By the time most people get to retirement age, they will have paid off their mortgage completely and will own their home outright. Therefore, the only costs you have to worry about are general running and maintenance costs.
So, whilst renting a property may be the easy choice for most, obtaining a mortgage provides several long-term benefits.
Borrowing money as a homeowner
If you’re looking to borrow money as a homeowner, you have the options of either a secured loan or an unsecured loan.
As secured loan allows you to borrow larger sums of money (£15,000) by securing the loan against your property. If you fall behind on the payments of a secured loan, you run the risk of losing your home.
Due to the security of the property, secured loan lenders can offer finance at cheaper rates than unsecured lenders.
Unsecured loans do not require the security of a property or any other asset. As a result, you must have an impeccable credit history to get approved with the lower rate lenders.
Some secured lenders will be able to accept those with adverse credit on their file. The security of the property acts as a safety net for the lender, so if the borrower ever fails to pay, they can use the property to recover the outstanding amount.« Back to Glossary Index