Secured Loans


Secured Loans

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Secured loans are loans which are generally secured on your home, though some companies will secure credit on other items such as your car. There are many providers of secured loans from high street providers to more adverse secured loan providers. The principle with each is the same and where secured loans on your home are concerned they provide you with a loan so long as you meet with their criteria which can be:-

* LTV - (loan to value) the LTV can be up to 100% with some lenders and is basically a calculation of what your home is worth against the amount you already owe plus the loan amount request. For example:-
* Valuation = £150,000.00
* Outstanding Mortgage Balance = £70,000.00
* Requested Secured Loan = £30,000.00
* Equals an LTV of 67% (£100,000 divided by £150,000 = 67%)

If you have fees applied to your loan which you choose to add to the total of the loan then this will also be included in the LTV calculation.

* Credit History - sub prime loan providers are more likely than a high street lender to accept you for a secured loan if you have in the past had some financial problems such as CCJ's (county court judgements), missed payments on previous credit items such as loans, credit cards or mortgages, been declared bankrupt or had an IVA (individual voluntary arrangement). Though if you do have some adverse history and apply to a sub prime lender, you should expect to pay a higher interest rate or APR as you are viewed as being an increased risk.

* Current Commitments - existing financial commitments such as credit cards with an outstanding balance, loans, existing mortgage payments etc

You must always declare on your application, in as much detail as possible, what existing commitments you have. Even though the secured loan company will run a credit check, if there is a discrepancy between the items you have declared and the items on the credit check then the loan company will need to contact you and you will need to confirm in writing what the other items are. This may not affect your eligibility for the loan, but may increase the time taken to process your application.

Dependent on the criteria of the secured loan company there may be different APR's available and you may not know which APR you will be offered until after your application has been underwritten and any valuations have been confirmed. At this point, if you do not want to proceed with the application you have the option to change your mind.

Always remember that your home may be repossessed if you do not keep up with your mortgage payments or any loans secured on it.

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