It is often essential to raise finance for major purchases including for example house related investments such as adding a conservatory or a loft extension. One method for raising this finance is to borrow money with security put down against the loan. This effectively guarantees the loan by assigning rights to the security in the event of a loan default. Such a loan backed by collateral is usually called a secured loan.
One of the most frequently used assets as security in such an arrangement is a house, or that portion of the equity in a house which is not already granted as security for other loans. This type of loan is usually quicker to arrange and more attractive interest rates are available as it is a safer proposition for the lender. In nearly all circumstances the lender will be able to recover their money. Because of the lesser risk profile of the secured loan it will often be attractive to those with a less than perfect credit history. The secured loan is therefore an option for those with equity tied up in property who are seeking low interest rates or have experienced problems getting an unsecured loan, or for whom an unsecured loan is not otherwise an option.
Secured loans can usually be arranged without punitive fees like those which a standard remortgage will attract. For this reason it is often a preferred route for those seeking to release capital from their real estate investments.
The capital which a secured loan releases can usually be used for any purpose including home improvements, buying a car, take a once in a lifetime holiday, and management or consolidation of other debts. By consolidating many short term debts into one larger long term secured loan the monthly payments to service the debt can be substantially reduced making a significant difference to the month to month finances of the debtor.
Secured Loans are available from high street banks and building societies as well as specialist lenders.
2 comments:
This time last year there were around 15 lenders in the secured loans market. Today a mere half a dozen or so remain.
The latest casualty in this economic downturn was First Plus, the secured loan lending arm of Barclays, who are closing their doors to new business from August 9th 2008. Interestingly enough, Barclays did not ‘create’ First Plus. When Barclays took control of The Woolwich several years ago, First Plus came with it, and they have been trying to sell it ever since. Having been unable to do so, Barclays have now decided to simply shut the doors instead.
Great post and thanks for the valuable information!
long distance moving company
Post a Comment