How To Get a Secured Loan

Secured Loan, homeowner loan, or to give it it’s official title, Second Charge Mortgage used to be known as last-resort lending. They tend to be applied for by applicants who, for some reason, cannot or choose not to apply for a normal First Charge Mortgage. 

Secured loans are far more popular now as the rates on offer are much lower than previously available.

Considering Taking Out a Secured Loan

Before taking out a secured loan, it’s worth considering alternative options. For smaller amounts of borrowing, unsecured loans are also an option. If you decide a secured loan is the way to go, it’s important to consider how affordable the loan repayments will be. 

The three main options when looking at raising additional funds against your home are:

  1. A further advance from your current Lender
  2. Re-mortgage to a new Lender
  3. Second Charge mortgage

Second Charge Mortgage

If you opt for a Second Charge Mortgage your existing mortgage with your current Lender will stay in place the same as it is now. The extra funds will be with a different provider. 

The second mortgage will be on a different rate of interest with a different direct debit. Some people run their second charge loan over the same term as their main mortgage in order to keep repayments low.

There are lots of different reasons why people look to raise additional funds secured against their property. These could be for: 

Secured loan in Leicester

  • Home improvements
  • Debt consolidation
  • Car Purchase or other vehicles
  • Paying for a wedding/honeymoon/special anniversary/
  • Holiday
  • Injecting cash into businesses
  •  Paying for school fees
  •  Paying tax bills
  •  Cosmetic surgery

 

There are some typical reasons why a Second Charge Mortgage may be more suitable than a Further Advance or Remortgage, you may:

  • Want to retain your current mortgage if it has a low-interest rate
  • Choose to retain your current mortgage because it’s an interest-only and you prefer to keep it that way
  • Have gone self-employed since you took out the original mortgage
  • Derive your income from multiple sources
  • Have a poor credit score
  • Want to avoid a Remortgage due to large redemption penalties on your current deal
  • Need to raise funds very quickly
  • Looking to raise capital against your UK property to purchase foreign property
  • Prefer to avoid all upfront setting up costs
  • Have had your current mortgage lender decline your further advance application
  • Looking to raise funds to pay a tax bill
  • Need to raise funds to purchase another property which isn’t currently suitable for a mortgage (non-standard construction/property in poor repair)
  • Need to inject cash into a business
  • Require capital to pay business tax liabilities or to clear a business overdraft

Applying for a Secured Loan

When applying for a secured loan, a broker fee and a lender arrangement fee are normally payable and these can be paid upfront or you can elect to add them to the loan. Please be aware that if you do add fees to the mortgage you will pay additional interest. You will also end up paying more interest back if you extend the term of any debts you are considering consolidating. If you are securing debts that are currently unsecured you are putting your home at risk if you do not keep up the repayments.

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