Loans -
Secured lending or unsecured lending?
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Many of us tend to keep ourselves clear of secured loans, to a degree it could also be argued that a substantial amount of us Brits, would actually prefer to opt for some form of unsecured lending. However it must be said that a number of borrowers do recognise the fact that going down the secured lending route could prove very beneficial.
If we take into consideration the sudden increase in interest rates, as well as the APR’s, (Annual percentage rate) on credit cards going up, the consolidation of all current outstanding debt into a single monthly repayment, utilising a secured loan could make good financial sense. But whether or not this is a sure fire technique, is dependent upon the exact mathematical calculations banks use to work out, what your repayments will be.
The dramatic rise we have seen in house prices of late, whilst it becoming continuously difficult for the average first time buyer to get onto the property ladder, believe or not it does have some benefits. Because of the rise in house prices, majority of homeowners in the south east, now possess a significant amount of equity, stored up in their homes. The equity in turn, could be release through a secured loan, could save them thousands of pounds worth of interest payments over the period of 10-25 years. This is due to the fact that secured loans have a much lower interest rate than credit cards, or any other form of unsecured debt.
Obviously your home is at stake if you default on your repayments, but a combination of good solid research, on the part of you the borrower and the lender should limit the chances of that taking place. The APR that the bank will decide upon lending to each individual person, is calculated upon how much risk the investment, into that person carries. The level of risk placed with each person has increased due to the current credit crunch, so the cheaper loans that were widely on offer before will be much harder to come by.
In saying this it is not impossible to get a low rate if you are considered by the borrower to be less of a risky investment. This will be worked out by how good your credit score is and whether you have defaulted on any payments over the last six years. Lenders normally tend to prefer larger loans taken out against a property, to minimise their risk.
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Call our loans centre on:
0800 1777 197
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