A report in March 2005, commissioned by shadow chancellor Oliver Letwin, identified that personal borrowing in the UK now stands at over £1 trillion, or £17,000 per adult. The report concluded that most of this debt is secured by the borrower’s home. Not all secured debt has to be against housing though; it can also take the form of second mortgages, second charges on property, or any secured borrowing against an item of significant value
Why choose a secured loan?
Many borrowers choose secured loans because they are readily accessible to property owners. The property is usually owner-occupied, but some lenders will underwrite secured loans to landlords of property with tenant occupants. Ex-council properties are also usually eligible for securing loans. Additionally, secured loans are usually easier to get for those people who are self-employed or have a poor credit record.
Another advantage of a secured loan is that most lenders will let you borrow more. Depending on the lender, you may be able to borrow up to 125% of the value of your property. You also can usually avoid some of the restrictions that often come with unsecured loans, such has how you can use the money you’ve borrowed.
typically have a longer repayment period. While this means you will be making payments for a longer time, it also keeps the monthly payment somewhat lower. Loan terms can vary from 3 years all the way up to 25 years, depending on the nature of the loan. By contrast, unsecured loans have terms that are much shorter.
As mentioned earlier, unsecured loans often come with restrictions on how you use the money. This is usually not the case with a secured loan. You can use the money for just about anything, including consolidation of other debts or physical improvements that will ultimately increase the value of the property. The latter is very common because the borrower ends up with more equity value and thus owes a smaller percentage of the total value of the home.
What do I risk by choosing a secured loan?
In a nutshell, if you don’t make your payments then you risk losing your property. That’s why it’s so important to make sure you are financially capable and personally responsible enough to repay the loan amount according to the loan terms. But in return for taking this risk, you gain a better interest rate and the ability to borrow greater amounts over a longer period of time.
How Can I Use The Web To Find A Secured Loan?
A very popular way for borrowers to find secured loans is via the internet. The number of web sites offering such loans has exploded in the last few years, resulting in more choices for more types of borrowers. Having so many choices, though, can be very confusing. It’s important to do your research and read all of the fine print and terms very carefully.
Many sites offer cheap rates and make special offers, but the terms often vary significantly from site to site. The only way to make sure you’re getting a good deal is to pay close attention to the details and only make comparisons between like products. Some borrowers work through an independent loan brokerage to compare their choices, while others prefer to gather the information and make the comparisons themselves.
- - What are the differences between secured and unsecured loans? Essentially, whether or not the loan is secured by property in the event the borrower defaults on the loan.
- - How do you find the cheapest loan? Through a combination of factors that include understanding your credit score, determining the best type of loan for your purposes, and shopping around
The abundance of online options for finding secured loans has led to borrowers being able to complete the loan process much faster than in the past. Competition in the marketplace has increased significantly, with many different rates and offers available. Potential borrowers aren’t limited to seeking secured loans from their bank or building society anymore. The internet has opened up many more options for consideration and simplified the process with improvements such as online applications.
Where Can I Find The Best Deals On Secured Loans In The UK?
The answer to this question is “it depends.” What constitutes the best deal on a secured loan will vary depending on the wants and needs of the individual borrower. There are a few key steps, though, to finding the best deal for you:
- Check your credit rating and take steps to improve it if necessary. Keep current on payments for your other debts, and reduce overall debt whenever possible.
- Research is the next step. Check out lenders and their offers thoroughly so you can determine with one is best for you.
- Ask for quotes from multiple lenders. Besides the usual information about rates and terms, find out how quickly the loan process will be completed and when you will get the money.
- Consider using an Independent Brokerage, who will have access to many lenders on your behalf and you only complete one application.
It is easier than ever to learn about and decide if one is right for you. Take advantage of the many information resources available to you and talk to several different lenders about their rates and offers. Compare offers carefully, paying close attention to the details and specifics of each one. By putting some effort into this process you can feel confident that you’re taking the right steps to find the secured loan that’s right for you.
- - Have you ever wondered how a creditor decides whether to grant you credit? For years, creditors have been using systems of credit scoring to determine if you’d be a good risk for credit cards and auto loans.
- - If you've ever been offered a substantial line of credit with one company and been refused by another, it's all a result of each company's credit scoring policies. Your personal credit score may fall within the acceptable limits for one company and not for another.
- - Chances are if you were shopping for a home theatre system, you would shop around to find the best deal. So why not shop around for a loan?