The wholesale loan industry is a subject that raises quite a lot of controversy in the finance sector, with many brokers and lending facilities taking a completely opposite stance to one another whenever the issue is raised. This is particularly true where the actual value of wholesale lending is concerned. Nonetheless, the sale of such products has a number of rather unique advantages on offer, both for the lenders themselves and for those seeking to borrow.

What are wholesale loans?

Broken down to the simplest level, a wholesale loan is an affordable, modern-day lending product that allows the consumer to borrow money at specially adjusted wholesale rates. However, this is only the general theory, as the actual interest rates that are charged will vary considerably from one lender to the next.

To understand how the wholesale lending sector works, we need to consider a working example. In a typical scenario, a wholesale loan broker will acquire funds from a principal lender at wholesale rates and then pass those funds on to a consumer at their own interest rates while applying any additional fees that are required to cover the costs of handling and processing the finances in question. When the consumer repays the loan, the wholesale lender is then responsible for paying the capital back to the investor who provided the funds at the beginning, along with any accrued interest.

Why is wholesale lending becoming such an attractive option?

There are basically two driving forces behind the popularity of wholesale loans, which need to be clarified before the layperson can fully understand precisely why these products look set to stay. In the initial instance, the main investor has a lot to gain from the practice of wholesale lending, as the returns are typically much better than other investment options with similarly low risks. Although these returns may vary considerably from one deal to the next, the rewards are reliable and usually quite profitable.

Secondly, as briefly mentioned in the first point, wholesale lending is comparatively risk-free. This is because wholesale loans are generally packaged as secured borrowing products. By offering wholesale lending products as secured loans, the investor can relax in the knowledge that their funds are safe, as the wholesale lender can always retrieve any unpaid funds by means of selling the borrower’s assets should they default on the borrowing agreement.

Owing to the fact that wholesale loans are secured, they can even be offered to those with less-than-desirable credit histories and those in other potentially high-risk categories, such as the self-employed or commercial loan applicants who are unable to demonstrate a suitable level of financial performance. As a result, this ensures that demand for this particular loan type remains high.

If you would like to find out more about secured loan products, from wholesale borrowing options and commercial loans to mortgages and bridging loans, then please contact UK Property Finance today.

If the thought of debt consolidation leaves you somewhat confused, scratching your head in search of meaningful answers, then you are not alone. It’s a sad fact that the vast majority of us are simply unable to get from one week to the next without some type of borrowing or credit line, whether it’s a mortgage, a string of credit cards, unpaid items from the catalogue, or even a dreaded payday loan.

Of course, when you break it down to the simplest level, there are two types of debt that most of us get into. These are the debts we can realistically afford to repay, and the debts that have seemingly spiralled way beyond control that we simply don’t stand a chance of paying back on time.

What is a debt consolidation loan?

Debt consolidation loans are a relatively new type of borrowing product aimed at reducing your monthly outgoings by lowering the interest rate on existing credit and extending the repayment period as an additional means of helping you budget. With debt consolidation, the idea is to simplify life without causing any unnecessary confusion.

As a useful example, let’s consider an employee at a bank who has taken out a personal loan, makes regular, and sometimes unauthorised, use of his overdraft facility, and also has a couple of credit cards that he likes to use to keep himself afloat until the next pay check arrives. With these three credit lines alone, our friend at the bank has a total of four finance products to juggle each month, and the interest rate and charges are an additional burden that he has to deal with.

With a debt consolidation loan, it would be easily possible to pay off the overdraft, settle the credit card debts, and simultaneously make a substantial repayment on the personal loan, which would help save money while also providing an additional safety net with any funds that are left over. Whereas the previous debts were costing £250 a month with an average interest rate of ten percent, the debt consolidation loan costs just £75 per month to keep on top of, and the interest rate has been reduced to around 4.5%.

Although the consolidation loan might take a while longer to pay off, our friend is already enjoying some substantial savings on his debt, both now and in the foreseeable future.

Secured vs. unsecured debt consolidation products

If you have the required assets, a secured consolidation will probably be the best way forward. Secured borrowing products are always the more affordable option, as the lender has the added assurance that, should the borrower default, the debt will be paid back in full through the sale of any agreed assets used as security. This results in larger loan amounts being made available with less stringent borrowing criteria and longer repayment terms.

Unsecured consolidation loans are typically only available to applicants with a good credit rating. However, if you are struggling with your debts at present, the chances are that you will have missed one or two repayments in the past, so this type of borrowing product might not be available to you.

As well as consumer debt consolidation loans, there are also several commercial loans available for the consolidation of business debts. If you run your own company and are looking to reduce or lower your debts while freeing up finances for other areas of your enterprise, then a commercial debt consolidation loan could well be in your best interests.

The UK’s decision to leave the European Union has placed a great deal of uncertainty on Britain’s economic future. No doubt, this will lead one group of investors to prosperity while causing serious grief for another, particularly where the property market is concerned. To call Brexit a potential dividing line between financial success and failure for the many different types of property investors is something of an understatement, particularly where the UK housing sector is concerned.

Of course, whether the Brexit vote results in a dramatic win or a substantial loss from your own perspective will ultimately be decided by which side of the fence you have found yourself on.

Recently, the Nationwide Building Society published a report that indicated another fall in UK house prices, with most properties experiencing a drop in value of around 0.4%. This is the largest monthly fall in half a decade and the second drop within two consecutive months.

The blame for this has been directly linked to higher inflation and a notable fall in consumer spending, which have also combined with Brexit, along with a drop in GDP, to make matters worse for UK homeowners. Of course, this is not the ideal scenario for anyone looking to secure the public vote in the next election.

Both sides of the coin

The fact that house prices are falling is particularly concerning, especially when one considers the fact that UK mortgage rates are still at an all-time low. With UK unemployment also at a record low, most experts would predict that the housing market should be boosted in strength, with prices steadily increasing.

However, this is not the case, and this has meant that a large percentage of property investors and homeowners have had to sit back while their valued investments have depreciated before their very eyes. Again, this is good news for some and bad news for others.

For first-time buyers, the drop in house prices will obviously prove to be something of a major advantage. However, long-term property investors and existing homeowners will not be impressed with the status quo, although the worrying trend is expected to revert in the not-too-distant future.

Provided the Brexit vote proves to be less of a disaster than initially envisaged and the next general election ushers in a new term of government that helps the country get back on its feet, house prices could easily start to rise again at accelerated levels, although this could spell the end of the record-low mortgage rates that many investors have been taking advantage of.

Whatever actually happens next is anybody’s guess, so it stands to reason that it isn’t really in anyone’s best interests to take anything for granted in the UK housing market in the next 12 months, particularly when we consider the previous year’s events.