Secured Loans
Important information about UK personal loans from Business Link
Secured Loans can be the most flexible way for a homeowner to borrow any amount of money large or small. A secured loan allows any homeowner to borrow against the residual equity in their home, which makes them perfect for those people who need to borrow larger amounts of money or perhaps have had credit problems in the past.
How does it work?
A secured loan describes a financial transaction whereby an institution lends money to an individual (or pair of individuals) who own a property (known as an asset), the lender then takes an interest in the property to the value of the loan, in the unfortunate circumstance that the individuals default on the loan or are unable to make the payments the lender can exercise the right to claim back the value of the loan by forcing the individual to sell the asset.
Who is it for?
Due to the nature of the product a secured loan is suitable for the following types of people:
- Those than own their own home and have equity within it.
- Those that need to borrow a large amount of money, typically any more than £15,000
- Those that would like to borrow money to set up their own business
- Those who have had credit [problems in the past can cannot be granted an unsecured loan
- Those who wish to borrow money over a long period of time, typically a period longer than 10 years.
The Equity Calculation
The amount of money that can be leant to an individual through a secured loan is limited by the equity available in their home. The available equity in a persons home is calculated by subtracting the value of any outstanding mortgage or other loans secured on the property from the current market value of the property. The resulting difference is the known as the equity that exists in the property. Normally a secured loan can only be made to a maximum amount equal to the equity that exists in the property.
Applying for a secured loan
Normally a secured loan is applied for through a secured loan broker (known as a packager). A packager will help you select the secured loan and secured loan provider most suitable for your needs and then guide you through the entire process. The process will begin with a valuation of your home whereby an independent valuer will confirm the current market value of your home.
Once the value of the home has been confirmed your existing lenders will be asked to confirm the current levels of lending secured on the property, the packager will use this information to confirm the maximum amount you can borrow and then prepare an offer from the lender to you. Once you have accepted this offer and completed the paper work your secured loan will be granted and wired to your account.
To find the best secured loans in the market use the Decision Finance loans marketplace to get a quote for the leading secure loan providers and packagers and apply online.