Secured Loans
- HOME IMPROVEMENT
- EXTENSION AND RENOVATION
- DEBT CONSOLIDATION
Do you need to release equity from your property for any of the above purposes? If you do, we can help you find the right deal. Whether you have a good or adverse credit, we are sure to find you a deal that is right for you.
What is a secured loan?
A secured loan, also called a homeowner loan, is a loan that is secured against your home. Like a mortgage, that means your home may be at risk of repossession if you are unable to make the monthly repayments on a secured loan.
How much can you borrow with a secured loan?
As the loan is secured against your home, a homeowner loan, you can normally borrow higher amounts than through a personal loan (for example over £20,000). The exact amount you can borrow depends on two main factors:
First is your ability to repay your loan each month. As a result your income from earnings, benefits and pensions, as well as your credit history, will be assessed to check you can afford the monthly repayments.
The other factor is something known as Loan to Value (LTV). LTV is calculated as the amount you owe on your mortgage as a percentage of the value of your home, in other words the equity you have in your property. For example if your home is worth £150,000 and you have £90,000 outstanding on your mortgage, you have an LTV of 60%.
We can normally find homeowner loans for customers at LTVs of up to 95% LTV.
When is a secured loan the right option?
A secured loan is often suitable if the amount you wish to borrow is large (for example over £20,000), or if you wish to repay it over a longer period. This is because many lenders will be happy to lendhigher amounts for longer if the loan is secured against a property.
Many personal loan providers will only lend to individuals who are employed, so secured loans are often attractive to those who are self-employed, contractors or where you have difficulty proving a regular income.
A homeowner loan is also an option for individuals looking for a loan with poor credit history, for example where payments on credit have been missed, as the higher risk of non-payment by the customer is offset by the loan being secured against a property.
You may also find that a secured loan could help you consolidate other forms of debt, and may allow you to reduce your monthly repayments significantly. If you’re considering a debt consolidation loan, you should remember it may take you longer to repay your credit and you may end up paying more in total as a result.
Secured loans are often a good alternative to re-mortgaging. For example if you pay a low interest rate on your mortgage or have high redemption penalties – it may be cheaper to take a secured loan than re-mortgage.
Using a broker to apply for a secured loan.
Most secured loan lenders don’t deal with customers directly. That means you will need to use a secured loan broker in most instances.
A secured loan broker will work with you to manage your application through to pay-out. They will provide help and assistance in completing all the paperwork, and will deal with the lender to overcome any challenges should they arise.
A secured loan broker will charge you a fee to cover the costs associated with arranging the secured loan for you – such as legal fees and valuation fees. This fee is added to the total cost of the loan and repaid along with the interest charged on the total amount borrowed. It will be included in the monthly repayment amount that your broker will provide.
Most brokers will only charge the fee when your loan pays out; it is important that you check with your broker first that you aren’t paying an application fee.
Repaying a secured loan.
A secured loan is repaid monthly like most other forms of credit. The amount you will pay each month will depend on the size of the homeowner loan you took, the loan term and the APR that you are charged. Your monthly repayment will include the loan, the broker and lender fees and the interest charged on the total amount borrowed. Your repayments will continue monthly for the full term of the loan.
Your property may be at risk if you do not keep up repayments on any debt secured against it.
Essence Finance Limited FCA Registration number: 956335 is an Appointed Representative of Goldwire Financial Solutions Limited which is authorised and regulated by the Financial Conduct Authority. Registration Number: 756760.
Goldwire Financial Solutions Limited. Registered Office: Ketteringham Hall, Church Road, Ketteringham, Norwich, Norfolk, NR18 9RS. Registered in England Number: 10282454.
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