Making home improvements is a very popular past time in the UK. Many people opt for improving their existing home rather than moving house to something better. Over the past years with mortgages being more difficult to obtain moving house to something better is often not even an option, but carrying out home improvements has been. Some improvements can be relatively inexpensive, whilst some changes can be rather expensive and require funding.
Because a secured loan takes a charge on your home it minimises the risk to a lender. People make their mortgage and secured loan payments a priority, so when things may go wrong, for example a member of the household loses their job, every effort is made to pay the priority payments. It is the unsecured loans and bills that fall behind.
Due to the reduced risk secured loan providers are in a better position to charge lower rates than the unsecured lenders. They are also in a position to advance larger loans and over longer terms than can be achieved with an unsecured loan.
This makes secured loans a cheap option to fund home improvements such as a new kitchen, windows, conservatory, bathroom, or even to build an extension and landscape the garden.
A secured loan is a loan which is secured on your property by way of a second charge, so in effect the loan is actually a second mortgage.
The first step is to go through a telephone application with an advisor so they can gather information about your circumstances including how much you are looking to borrow, the purpose of the loan, your income and employed/self employed status, existing mortgage details, property value, your budget for the new loan and details about your credit history. The advisor will then take some time to consider which lender would be most appropriate to use and call you back with the best quotation. Depending on certain factors it may be necessary to arrange for the property to be used as security to be valued.
Your adviser will take time with you to discuss and understand your circumstances to establish which method of borrowing would be most beneficial to you. You will need to own your own home and have an existing mortgage to be eligible for a secured loan.
The advantage of taking a secured loan over an unsecured loan is that typically interest rates are lower. The disadvantage should only become an issue should you be unable to maintain your payments because the lender has a charge on your property as security so they can repossess the property and sell it to recover the debt if you do not keep up repayments. If you have been unable to obtain an unsecured loan in the past due to poor credit history, you may find you are still eligible for a secured loan.
From the first telephone call to the release of funds takes approximately 21 days, although this can vary depending on how complex or straightforward your circumstances may be. If there is a specific time by which you need the funds, discuss this with the advisor to ensure we can manage your expectations.
Secured loans are regulated by the Consumer Credit Act, therefore any charge to repay early is limited to just 2 months interest.
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