In the wake of the pandemic, people have been demonstrating a more active interest in borrowing money against their homes. The latest figures from the Secured Loans Index once again indicate significant month-on-month growth for the sector.
Attracted by low-interest rates and fast completion times, borrowers are also setting their sights beyond the big High Street banks. With specialist products available to suit all budgets and requirements, the UK’s independent secured lending sector is going from strength to strength.
But what can you do to ensure you get an unbeatable deal on your secured loan? Irrespective of how you intend to spend the money, which lenders should you target with your applications?
Should I Take Out a Secured Loan?
Secured loans differ from personal loans in that they are collateralised; this means that the funds borrowed are secured against assets of value, typically the applicant’s home.
The lender has an insurance policy in the event of non-repayment. Secured loans are considered comparatively low-risk on the part of the lender, paving the way for preferential interest rates and low borrowing costs.
If you own your own home, taking out a secured loan could prove more cost-effective than applying for a personal loan. In addition, secured lending is a more flexible and accommodating option for those who may struggle to qualify for an unsecured loan.
If you have a poor credit history, no formal proof of income, or a history of bankruptcy, qualifying for a personal loan may not be possible. With secured loans, eligibility is determined almost exclusively on the basis of the assets used to secure the loan.
Just as long as you have sufficient equity in your home, you should be able to qualify for a competitive secured loan.
How Can I Get the Best Deal On a Secured Loan?
Two primary factors will determine the competitiveness (or otherwise) of the deal you are offered:
- The lenders you approach with your applications
- The strength of your case and supplementary documentation
Your job is to convince the lender that you are a safe bet. In doing so, they will happily loan you the money you need at a low rate of interest.
Even if you are able to qualify for a secured loan on the High Street, considering the alternative options available is essential. Contrary to popular belief, the UK’s biggest banks and lenders do not always offer the most competitive deals.
Particularly where adverse credit or proof of income may be an issue, skipping the High Street entirely could be advisable.
In fact, approaching any lender directly with a secured loan application could compromise the competitiveness of the deal you are offered. Irrespective of how much you need to borrow and your intentions for the funds, broker support is essential.
How Can a Broker Help Me Get a Good Deal?
Enlisting broker support at the earliest possible stage can help in a number of ways.
Many of the UK’s most competitive specialist lenders offer their services exclusively via broker introductions. Consequently, the only way their products and services can be accessed is with the help of a broker.
It is the job of your broker to negotiate the best possible deal on your behalf. Having established strong relationships with an extensive network of lenders, they will know exactly who to target with your application and how to present your case.
Prior to your application going ahead, your broker will help you determine your suitability for a secured loan. If there are more appropriate options available for your requirements, they will be presented and discussed. They will also conduct a comprehensive market comparison on your behalf, narrowing things down to the best deals from hundreds of offers.
The services provided by brokers are always 100% free of charge to the client. Irrespective of whether you choose to go ahead with your application, you will not be expected to pay a penny.
What Are the Alternatives to a Secured Loan?
Depending on your financial circumstances and requirements, your broker may advise considering the alternative options available.
Just a few examples of which include short-term bridging finance, remortgaging, taking out a second mortgage, equity release, and unsecured personal loans; all have their unique benefits and drawbacks, which your broker will disclose and discuss.
When it comes to raising a significant amount of money for any purpose with as little hassle as possible, a secured loan is hard to beat. Particularly given the flexibility of the qualification criteria, based almost entirely on the availability of assets to secure the loan.
For more information on any of the above or to get your secured loan application underway, contact a member of the team at UK Property Finance today.