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Secured loans market filling the mortgage gap

Feb 20, 2015   //   by James Helliwell   //   Lending Guide  //  Comments Off on Secured loans market filling the mortgage gap

houses made from money - secured loans

The secured loan market has grown in leaps and bounds since the financial crisis. Today, it has become a huge player in dealing with the mortgage gap. Here is a look at how it has been able to achieve this.

Taking care of the self employed

Following the financial crisis, the FSA outlawed self-certification mortgages and banks had to bring in stiffer affordability checks to reduce high-risk lending. This led to massive drop in the number of mortgages given to self-employed individuals. The number has fallen more than 72% from post financial crisis years.

In the last 24 months, secured loan lenders have successfully taken advantage of this gap in the market to offer lower rates and come up with innovative products.

Experts at Loan.co.uk who offer online secured loans say “the self-employed market is one that has a lot of credit worthy individuals who are unfortunately unable to meet with extreme screening of the average bank. We are therefore offering products allowing them to borrow as much as £1m to take care of their mortgage needs”.

Providing for people with adverse credit

The mortgage market typically only takes care of people with a clean credit rating. Secured lenders on the other hand are more accommodating, offering products to consumers irrespective of what their credit ratings say. People with mortgage arrears, county court judgements etc. can all get credit.

Some of the products offered by secured loan lenders can compete with what is available on the high street. It is possible to find loans of as much as £100,000 for individuals with what will be regarded as a “fair” credit rating. There is also a wide range of products for people that will never be considered by the average high street lender.

Helping landlords

With a secured loan, landlords can now easily make renovations to their properties to increase its value without going through the high street lending bureaucracy. They can also raise money needed to deposit on another buy-to-let property and expand their portfolios.

Some of the secured loan providers offer very competitive APRs and a high maximum loan amount, making it almost difficult for landlords to ignore the products on offer.

Dealing with interest-only mortgage

There is a limited offering of interest only secured loans available today but the interest-only mortgage market is where the secured loan providers have the biggest opportunity.

As interest-only mortgages continue to withdraw, existing interest-only customers have to deal with the tough decision of raising funds against their property as many lenders generally refuse to finance consumers unless they make the switch to a repayment mortgage. Going down the secured loan route however will save these consumers more time and money than going the complete remortgage route.

 

Business Loans Explained

Oct 23, 2014   //   by Keith McDonald   //   Business Guides, Lending Guide  //  Comments Off on Business Loans Explained

A business will often need to borrow money at some point, either to survive or to invest for the future. A business loan is one way for a firm to access the finance it needs. Let’s find out more about the options available.

A business will often need to borrow money at some point, either to survive or to invest for the future. A business loan is one way for a firm to access the finance it needs. Let’s find out more about the options available.

Business loans typically range between £1,000 and £50,000, though much larger amounts are available as well. Firms can use this funding for a variety of reasons: from improving cash-flow in the short term to investing in capital, personnel, or research and development in the longer term, which will help a business to expand.

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Bridging Loans Explained

Oct 2, 2014   //   by Keith McDonald   //   Business Guides, Lending Guide  //  Comments Off on Bridging Loans Explained

If you need to act quickly to secure a loan, or you only wish to borrow for a short period, it may be difficult to secure a commercial loan or mortgage to suit your needs. So why not consider a bridging loan?

What is a Bridging Loan?

A bridging loan is a short term funding option which can be arranged much more quickly than a standard commercial loan. Bridging loans are useful for funding short-term projects, or for bridging the gap between securing a property and arranging a longer-term commercial mortgage.

How Much Can I Borrow?

Bridging lenders can offer up to a maximum of about 80% loan-to-value against a property. However, this will be against a short-term 90-day valuation of the property, which is likely to be lower than the open market rate, so this may impact the amount you can borrow.

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Secured Loans Explained

Sep 30, 2014   //   by Keith McDonald   //   Lending Guide  //  Comments Off on Secured Loans Explained

Secured loans, or homeowner loans, allow property owners to borrow sums of money against their homes. If you don’t want to interfere with your existing mortgage arrangements, a secured loan could be the ideal solution.

Imagine the situation: house prices are going up, you want to release some of the equity in your home, but your mortgage deal is too good or too expensive to break. You’ve then become what’s effectively known as a mortgage prisoner.

Or, another scenario: you’ve become self-employed and mortgage lenders are less interested in lending to you because of the new stricter mortgage rules.

Secured loans are not only a good alternative, but also an affordable one, as rates have improved in line with the housing market.

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Variable Rate vs. Fixed Rate Mortgages

Sep 30, 2014   //   by Keith McDonald   //   Lending Guide  //  Comments Off on Variable Rate vs. Fixed Rate Mortgages

When you’re looking for a mortgage, one of the most important decisions you’ll have to make is whether to opt for a fixed-rate mortgage or a tracker mortgage. Let’s compare them both here.

The main difference between the two is that variable rate and tracker mortgages can both fluctuate, while the rates on a fixed-rate mortgage are set in stone for the duration of your deal.

The main similarity between the two is that both normally offer a headline rate for a period of between 2 and 5 years, after which they revert to the lender’s standard variable rate.

At this point, you can remain with the same lender, or look to re-mortgage at a lower loan-to-value to secure a better rate.

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Guarantor Loans Explained

Sep 26, 2014   //   by Keith McDonald   //   Lending Guide  //  Comments Off on Guarantor Loans Explained

If you don’t have the best credit history, getting an affordable loan can prove to be a challenge. But there’s now a slightly different type of loan, called a guarantor loan, that could help you to get around this problem.

Guarantor loans allow a second person to act as a guarantor. So, if you’ve got a friend or relative who is prepared to vouch for you, you’ll be able to lend on the basis of their credit history rather than your own.

A guarantor loan allows you to access between £1,000 and around £10,000 over a term of one to five years.

The rate of interest will be higher than a standard personal loan, but it’ll be much lower than high-cost alternatives, and you’re unlikely to face high up-front changes or arrangement fees.

Your guarantor can be anybody that isn’t financially linked to you, such as a spouse or partner.

Ideally, you want your guarantor to be at least 21 years of age, with a good credit history, and a homeowner in the UK. These factors help to convince a lender that the debt is in safe hands.

Some lenders may be more flexible about your guarantor, but you may end up paying higher rates as a result.

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