Choosing the right loan
A secured loan is any loan that requires the borrower to provide the lender with some form of security. In the case of secured 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.
Which Loan ?
Secured home-owner loans are available in varying amounts and for loads of different purposes, including debt consolidation. The amount available usually ranges from £3,000 onwards. 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 could be charged a penalty if you repay your loan earlier than agreed, and you should check each lender's individual policy in relation to this.
Lenders charge interest on the amount you borrow, which is referred to as the Annual Percentage Rate or otherwise seen as (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, your credit scoring, your ability to repay the loan and your personal circumstances, for example any bad credit or ccjs. Subject to your circumstances, you may be able to borrow up to 125% of the property value. The annual percentage rate quoted by the lender will usually be typical rates (typical a.p.r), and these act as a guide only as the exact rate offered will be on an individual basis.
You can compare the annual percentage rate of various loans in order to gain the most competitive loan. This again is an important part of choosing the right secured loan. Generally, secured loans are alot easier to obtain than unsecured loans. This is because the lender has the benefit of security, which provides protection in the event of a customer's inability to repay which can happen should an unfortunate circumstance occur. This also means that persons who are self-employed, 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.
If you have looked at all the various loan options available to you and decided that a secured loan is the one most suitable, how do you go about choosing the right secured loan?
It is a good idea to consider your options and requirements before you make any enquiries, below is a checklist of things to consider when choosing the right secured loan.
- How much do you want to/need to borrow
- How long do you need to repay the loan
- What could you afford to repay a month
- Do you want a fixed rate loan
- Do you want a variable rate loan
If you can answer these questions then we can find the right secured loan 4 you.
Lenders that offer secured loans, or home owner loans, as they are also called, use the equity in your property as security against the loan, so the current value of your house and your outstanding mortgage will be taken into consideration when assessing your suitability for a loan.
When applying for a secured loan one of the main things that will be taken into consideration is your credit rating. Lenders will make a decision on the basis of information supplied by the country's two leading credit reference agencies - Experian and Equifax. These two companies hold information about individuals from various sources. This information is sent to the lender and they will decide on your eligibility for a secured loan.
If you are refused a loan because of a poor credit record, or you are unsure what your credit rating is, you can check your credit report for free at Annual Credit Report
Even if you have bad credit, ccjs or other credit impairments we can still help find the right secured loan 4 you.
