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The loan arrangers maine1/21/2024 For instance, when a borrower has a mortgage with a competitive fixed or discounted interest rate and where there are redemption penalties to pay for early settlement, or if a borrower wants to apply for a loan over a short period of time. There are a number of examples of other circumstances where a secured personal loan may be a better deal than remortgaging. In these circumstances they may be better holding on to their existing low rate, prime mortgage and applying for a secured personal loan to raise additional capital. Their only option could be a sub-prime mortgage with a higher overall rate of interest. If, during the term of their mortgage they have experienced financial difficulties and built up a history of arrears, they may find it difficult remortgaging with another mainstream lender. Consider, for example, a borrower who has their main mortgage with a traditional high street lender, with a competitive rate of interest. There are circumstances in which a remortgage is not always best advice. Why do borrowers not simply apply for a mortgage? If I have a client who wants to raise additional capital, I would recommend a remortgage. They are frequently cheaper than unsecured loans and will often accommodate an element of impaired credit, but the rates are not usually quite as low as mortgages. As with any loan product, the rates vary depending on the applicant’s circumstances, but in general secured personal loans could start with rates as low as 6.9%. There is no restriction on the uses to which a secured personal loan can be put.Īre secured personal loans more expensive than other forms of loan finance? What sort of things do borrowers use secured personal loans for?Įverything from debt consolidation to home improvements, car purchase, holidays and general capital raising. Lenders include First Plus Financial, First National, Endeavour Personal Finance Limited, igroup and Future Mortgages. These organisations are brokers – they do not lend their own money – but are all major players in this market. The brands you would expect to see featured in secured personal loan TV advertising, in the press and via direct mail include Ocean Finance, Norton Finance, Dial4aloan and Freedom Finance. Who are the major players in the secured personal loans market? This is the reason why, within the industry, the term is ‘secured loans’ rather than ‘second charges’ – as they are not always seconds. This loan will be a first charge, as there is no mortgage on the property. There are instances, however, where a homeowner may own a property outright and no longer has a mortgage, but applies for a secured loan to consolidate debts or raise cash for other purposes. This means that, in the event of default, the second charge lender is paid their outstanding monies after the first charge lender has been paid. If the homeowner subsequently applies for a secured loan with another lender (for example, to consolidate other debts, make home improvements, or to go on holiday) then the second loan will be secured with a second charge. If a person takes a mortgage to buy a property it will be secured with a first charge. Loans can be secured on a property by either a first or second charge. Unsecured loans typically cover amounts up to £15,000 for periods up to 10 years. In return for this security, secured loans usually come with competitive rates of interest and terms which will extend to 25 years. This means that if the applicant defaults on their loan payments, the lender has the right to repossess the property on which the loan is secured. Secured loans, as their name implies, are secured by a charge on the applicant’s property. Credit cards, revolving credit (frequently used by retailers), and overdrafts are popular alternatives to unsecured loans. They are simply fixed term, fixed amount loans and no form of security is required. Loans can be either secured or unsecured and, if they are secured, they can be first or second charge loans. People frequently get confused by the terminology used within the lending industry to describe different forms of loans. What is the difference between a personal loan, a secured personal loan and a mortgage? With borrowing levels at an all time high, more and more people are looking to consolidate their debts, but remortgaging is not always the best or cheapest option
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