Although many like to cash in their home equity to get a holiday loan, experts are warning that this year may not be the best year to try that. Negative equity is a very real problem for many and with more value drops predicted, this type of holiday loan has not been recommended. Most consumers are seeking to play it safe this year and avoid getting a holiday loan until the market restabilises. This may mean deferring their vacations as well, but for many, the security is worth it.
“The credit crunch has prompted a flight to safety by borrowers who have been stung by dramatic rises in the rates on short-term deals,” commented Sean Gardner, director of MoneyExpert.com. “At the same time lenders are increasingly keen on signing customers up to long-term deals which offer them certainty.”
Gardener added, ‘Early redemption charges on long term deals tend to be more substantial than shorter fixed term mortgages. In some instances you can be hit with a charge of 13 percent of the value of your loan - which on a 150,000 pound mortgage would mean paying 19,500 pounds to get out of the deal.’
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