By Donna Puncher CeMAP Introduction When choosing a mortgage, one of the most important decisions you’ll make is…
Published: March 1, 2021
Is a Secured Loan Right For Me?
There are many reasons why borrowers may benefit from a secured loan.
Secured loans can be especially beneficial for those with a history of bad credit or borrowers looking to consolidate a number of large debts. This is because the interest rates on secured loans are generally lower than payday and guarantor loans.
Secured loans can be useful in the following situations:
You don’t want to switch mortgage deals
If you’ve found yourself with incredibly low mortgage rates then of course switching your mortgage over to a new lender may make little sense. Other situations where it wouldn’t be appropriate to refinance your current mortgage would be if you were tied into a deal and subject to Early Repayment Charges (ERC’s) which can be expensive (ranging from 1-5% of the loan repaid).
If you want to keep your existing mortgage as it is and secure a new loan on top then speak with a friendly member of our team today, for an expert comparison on the best deals and options available to you.
If you are looking for a bad credit secured loan or second charge to help with;
- Debt consolidation
- Home improvements
- Secured loan for business
- Car purchase
- Holiday property
- Gift to family member
- Secured loan for a buy to let
For more information about whether a secured loan is right for you read our FAQ’s section below.
Quick FAQs
Take a look at our extensive FAQ section
For the answers to some of our most commonly asked questions, below.
The rate you are offered on a secured loan will depend on your current financial situation. Simply put, the higher of a risk you appear to lenders, the higher the rate offered to you will be. Borrowers with a clean credit report can easily expect a low loan to value (LTV) and will qualify for the best rates available from lenders. Whilst borrowers with a history of adverse credit may be subject to a higher LTV and may have to consider higher rates.
Before making an application with a lender, we will determine what rates are available to you and talk you through the exact costs.
Again, this depends on your credit history and the size of loan you’re looking for.
Generally, those with a clean credit report can expect to borrow up to 95% on secured loans with competitive rates, whilst borrowers looking for a secured loan with bad credit may expect to borrow 75-85% LTV. However there are exceptions to this, non-equity loans being an example.
It is possible to borrow on your home without equity and raise finances with a ‘non-equity loan’. These loans work in the same way as a secured loan but do not require you to have equity in your property in order for a loan to be taken out. So regardless of the amount of equity in your home, even if you’re in negative equity, there are lenders who will still consider your application for a loan.
Of course these types of loan aren’t cheap as the rates on a non-equity loan are high. However if you have no equity in your property but want to raise funds for something, a specialist non-equity loan is an option we can help you to explore.
It is possible to find secured loans on buy to let properties. Obtaining a secured loan on a buy to let (BTL) property works in the same way as secured loans on residential properties, however, lenders assess applications and offer loans for BTL properties in a very different way.
For example, applications for residential properties are assessed on the borrowers’ income and ability to meet repayments, whilst for BTL applications, lenders will assess affordability by looking at a property’s rental income, although sometimes they will also take a BTL applicants income into consideration.
When securing a loan against a BTL property, it is sometimes possible to borrow on an interest only basis, instead of a repayment basis, as is the case when securing a loan against residential properties.
If you’re looking to secure a loan on your BTL property you may want to seek the help of specialist advisors, like Amber Mortgage Solutions, who will be able to advise on the best type of loan for you.
Securing credit of any kind can be tricky when you’re self-employed, with many lenders having varying requirements for borrowers to demonstrate their income. It is no different when applying for a secured loan, although it is possible and there are many flexible lenders out there who will consider applications for secured loans for the self-employed.
Contact us today! Our friendly advisors will be happy to talk you through the next steps available to you and help you on your way to obtaining a secured loan.
We’re here to help you, not judge you, so call us on 01702 619 221.