Secured loans are obviously, as their name clearly states, a form of loan that must be secured against an asset. There are numerous types of secured loans, but here today we want to discuss the secured homeowner loan.
The asset that must be put up is the equity on either a primary or secondary residence. It is only a lucky minority of people who actually have an additional property.As these loans are secured loans tenants who do not actually own the house in which they live cannot apply. The only kind of loans available to a non homeowner is an unsecured loan. However unsecured loans are not readily available, and even for homeowners an unsecured loan is hard to come by.
A secured loan is an excellent way for a homeowner to borrow for almost any purpose whether the purpose is vehicle purchase, home improvements of all kinds such as to build a conservatory, a garage a new kitchen, etc. You can even go on a luxury holiday anywhere in the world with your secured loan funds. For those thinking about getting married you can arrange your dream wedding and pay for it with your secured loan.
To obtain a secured loan you must have enough equity on your property and equity is what is left when you deduct the mortgage balance from the value of the property. If a homeowners property is worth 250,000 and he has a mortgage balance of 160000 the available equity is 100000.
Prior to the credit crunch, loan to value secured loans were available up to 100% of the value of the property. Now this is not the case. The old favourite the 125% LTV secured loan plan is also now completely defunct.
Now the maximum equity that any secured loan lender takes into account is 70% for a self employed secured loan borrower, and 80% if the prospective secured loan applicant is employed. Therefore based on the previous example an employed person could obtain a secured loan of 40,000 maximum, while the maximum available secured loan for a self employed applicant would only be 15,000.
Even in the current credit crunch it is still possible to obtain a secured loan even if your credit rating is bad. However the underwriting criteria has tightened up enormously over the course of the past two years. Until a couple of years ago bad credit secured loans were available to even those with the worse possible credit files at 75% LTV.
In the past even when matters were extremely serious it was still possible to obtain a bad credit secured loan even for a homeowner staring the repossession of their property right in the face. A person can lose their home through no fault of their own but by having been made redundant or through hospitalization. Then a bad credit secured loan could have saved the day.
In the current economic climate bad credit loans are still available with an equity restriction of a maximum 60%. Two secured loan lenders one of which is First European Securities still grant bad credit loans to homeowners with unlimited adverse at 50% loan to value.
There are still two secured loan lenders in the UK such as First European Securities who grant bad credit secured loans even to those with very bad mortgage arrears, unlimited county court orders etc. However the maximum secured loan on this plan is about 25,000 and the LTV is restricted to 50%. An example of this equity for bad credit loans is that if a property is worth 200,000 , the mortgage balance would have to be under 100,000 for any secured loan whatsoever. If the mortgage is 90,000 the maximum possible secured loan available would be 10000.
Underwriting has tightened up in the secured loan market, especially when we are considering bad credit loans.However bad credit secured loans are still available.
Champion Finance has been established since 1985. They arrange secured loans for all circumstances. Whole of the market remortgages , and mortgages are also available.
Related posts:
- The Simplest Types Of Loans For Homeowners Are Secured Loans Which Are Also Called Homeowner Loans.
- The Many Benefits Of Homeowner Loans / Secured Loans.
- Secured Loans And All Their Benefits.
- Remortgages, Secured Loans And Homeowner Loans Are Not Only For The Boring Things In Life.
- Bad Credit Loans Are Still Available.
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