Secured Loans UK - A secured loan is any loan that
requires the borrower to provide the lender with some form of security. In the
case of secured home owner loans, the security will be the borrower's
property, regardless of whether it is mortgaged or owned outright. Loans
secured against property that is already mortgaged are known as second
charges, whereas loans secured against a property owned outright with no
existing mortgage in place are known as first charges. See below for a quick
guide to secured loans.
Secured
home owner loans are available in varying amounts and for many different
purposes, including debt consolidation. The amount available usually ranges
from �3,000 to �50,000, although some lenders will consider lending up to
�100,000. The amount borrowed is repaid monthly over a term agreed at the
outset, which will usually range between three years and twenty five years.
You may be charged a penalty if you repay your loan earlier than agreed, and
you should check each lender's individual policy with regards to this.
Lenders
charge interest on the amount you borrow, which is referred to as the Annual
Percentage Rate (A.P.R). The amount you can borrow, the term available and the
A.P.R will all depend upon the equity you have in your property, the lender's
view of your ability to repay the loan and your personal circumstances, for
example any adverse credit. Subject to your circumstances, you may be able to
borrow up to 125% of the property value. The A.P.Rs quoted by the lender will
usually be typical rates, and these act as a guide only as the exact rate
offered will be on an individual basis. As a general rule, it is advisable to
compare the A.P.Rs of different loans, as this is a good way to determine how
competitive they are.
Generally, secured loans are much easier to obtain than unsecured loans. This
is because the lender has the added benefit of security, which provides
protection in the event of a customer's inability to repay. This also means
that persons who are self-employed, or who have recently changed jobs, or who
have adverse credit can take out a loan. They are also useful for larger
amounts or where the applicant requires a longer repayment period.
Lending
institutions offer you the option of taking a secured loan via their branch
network, over the telephone, via a written application or online through their
website. Initial assessment of your application can be made quickly, however
loans under �25,000 are regulated, and a 7 day consideration period will be
given to allow time for you to assess the implications of the credit
agreement, and to ensure that you are fully aware of all the terms and
conditions. When assessing your application the lender will consider your
income and financial commitments to determine whether you can afford to take
on and repay additional finance. They will look at your past credit history
and take into consideration any adverse credit such as mortgage arrears,
defaults or county court judgements. All lenders insist that where an
applicant is married, both parties should be named on the application form.
Lenders
frequently use credit scoring facilities and credit reference agencies to
assess your suitability. Credit scoring assesses your personal circumstances
and statistics to determine which broad category of borrower you fit in to.
Credit reference agencies provide a detailed analysis of your financial
position as they hold information relating to your credit history, any adverse
credit and any existing commitments.
