Frequently Asked Questions for Secured Loans
What is a secured loan?
A secured loan is a financial product that is secured against a property. As most borrowers use their home as security, secured loans are also referred to as homeowner loans. From the lender’s perspective, the risk involved is much lower than unsecured loan products, which is why secured loans often have much lower interest rates. The chances of being approved and accepted for a secured loan are typically quite high, although your home may be at risk if you fail to make the repayments on time.
Why choose a secured loan?
There are many good reasons why you might choose to take out a secured loan over an unsecured product. For a start, the likelihood of being approved for a secured homeowner loan is much higher than with any other loan product – particularly if you are self-employed or if you have been turned down for finance in the past. Additionally, the amount you can borrow when applying for a homeowner loan is also much higher than with the vast majority of other loan products. You can also borrow for longer which means that the repayments are much more affordable.
Am I eligible to apply?
If you are a UK homeowner and you own your property outright or you have sufficient equity in your property then you can apply online for a secured loan now!
How long does it take?
The process of applying for a secured loan using our website is very quick indeed. We offer a highly streamlined service, which means that the money you need could be in your account in a matter of days. As no two cases are the same and everybody has different needs, you should talk to one of our advisors who will provide you with an accurate time-frame based on your individual borrowing requirements.
What about early repayments?
Most of the lenders we work with have an early repayment charge that equates to eight weeks’ interest on the outstanding balance at the time you wish to settle. However, the actual rates will vary considerably – depending on the terms and conditions set out in the credit agreement. If you are planning to pay your secured loan off early then let us know in advance and we will find you an appropriate finance product that allows for this.
What can a secured loan be used for?
Although home improvements are the most popular reason for secured borrowing, people take out secured homeowner loans for a wide variety of reasons.
Secured loans can be used to pay for:
- A New Car or Recreational Vehicle
- Luxury Holidays and Honeymoons
- Debt Consolidation and Paying Off High Interest Unsecured Debts
- A New Conservatory, Loft Conversion or Kitchen Extension
- Patios, Driveways and Landscaped Gardens
How long will the loan last?
Most unsecured loans are taken out over a period that extends no longer than five years. However, with a secured loan you can spread the repayments over a period lasting anywhere between 5 and 30 years! Of course, the longer the repayment terms – the more you end up paying back – although the monthly amount will obviously be lower.
Will my loan application show up on my credit file?
When you apply for a homeowner loan using our services, we perform a quick check to verify the details you have provided us with and this does show up on your credit file – albeit with no adverse effect. Other lenders should not be able to see this information. If you are approved for finance and you accept the loan then this will be registered on your file and the information will be available to anyone else looking at your credit history.
What is a homeowner loan?
A homeowner loan is a secured borrowing product that is taken out using the available equity in a property owner’s home as security for the lender. If repayments are not met on time, the borrower may end up losing their property, although most secured loan providers would rather avoid this happening.
What happens if I have a bad credit score?
If you have run into difficulty in the past with previous financial commitments then you may find it very difficult to obtain a competitive loan deal with affordable interest rates. However, even if you have CCJs and a poor credit rating, there are still a number of borrowing options available, as there are many people in the same situation. With a bad credit loan, we will look at your application on a one-to-one basis and search for the most affordable borrowing product in line with your specific circumstances.
As the loan is secured against your property, lenders know that their money is safe as they are legally entitled to sell your home if you cannot pay the money back. Of course, this is something that we all want to avoid and provided you can make the monthly repayments on time, you will not stand to lose your home. If you do experience any difficulty in terms of paying the loan back, then please contact your lender at the earliest opportunity so that they can work out an alternative repayment plan.
What does LTV or Loan to Value mean?
Loan to Value is an expression that is used by mortgage lenders to determine the value of a loan in relation to the actual amount a property is worth. For example, if your home was worth £200,000 and you applied for a secured loan worth £150,000 – the loan would be 75% LTV.
What are variable rates?
A variable rate is an interest rate linked to other rates that fluctuate over time – such as the Bank of England Base Rate. Unlike fixed rates, variable rates are usually much cheaper in the short term – but they are not guaranteed to stay low. If the Bank of England raises the interest rate and you have a variable rate loan, your monthly repayments could increase a considerable amount.
What are consolidation loans?
A consolidation loan is a secured borrowing product that is used to reduce the number of monthly repayments a debtor must make, whilst also lowering the payment amount itself. Consolidation loans are a useful tool for lowering the cost of high interest products such as credit or store cards and dealing with other unsecured debts such as hire purchase agreements and other expensive loan facilities. When taking out a consolidation loan, it is important to remember that although a longer repayment term will lower the amount you pay back each month, you will ultimately pay back a lot more in terms of the actual interest you are charged.
What is the difference between a secured and an unsecured loan?
With an unsecured loan, the loan provider will base their decision to lend using a borrower’s credit score without requiring any security in the form of a valuable asset such as a property. Another difference between a secured and unsecured loan is that secured loans are more readily approved with larger sums being made available.
How fast is the decision making process for secured loan applicants?
If you are looking for a quick decision on a secured loan product then you will be glad to know that we can usually provide an answer, in principle, within 15 to 20 minutes after receiving the initial application. On top of this, we will also be able to give you additional information such as the available repayment options, rate of interest you can expect to pay and details of any other costs involved.