Secured Loans Explained
Secured Loans are ideal for debt consolidation if you have a couple of credit cards with a balance over £7000. Secured loans are not really suitable for debt consolidation purposes if you have a couple of loans that have not got that long to run as by taking out a secured loan to pay of loans over a shorter period you will be paying more back at the end of the term and will be extending the term.
The most popular reason to take out a secured loan is for debt consolidation. Secured Loans are usually taken out between five and twenty five years. You can off course pay off a secured loan at any time and the typical redemption would be a one month interst penalty.
Secured Loans are for employed and self employed applicants, for employed the maximum LTV is 80 LTV for self employed applicants. Equity is the difference between your mortgage balance and the value of your property.
Secured Loans are sometimes known as a second charge this is because the secured loan is the second charge after your mortgage. your mortgage is always the first charge. If you do not have a mortgage on your property you will not qualify for a secured loan you would have to arrange a mortgage on the property.
If a property is jointly owned or if there are more than two people that own the property all owners will have to apply for a secured loan and will have to sign for this and understand what they are signing. All though some secured loan lenders as lomg as everyone has signed the documents for a secured loan the chequer can be made payable to one applicant but the secured loan broker or lender would ask for a signed letter from all applicants agreeing that the cheque can be made payable one or two persons.
If you are divorced but your partner is still on the mortgage of the property the secured loan lender might ask for your partner to obtain independent legal advice befroe they sign the secured loan documents. But all parties that own the propert or that are on the mortgage will have to apply for a secured loan.
Secured Loans can be arranged through a master broker or by searching online. Berfore applying make sure that the company deals with most secured loan lebders for you to obtain the very best rates for a secured loan.
Retired applicants are also eligiable to apply for a secured loan as long as they can afford th loan repayments and also there mortgage payments. The secured loan lender might ask to see all pension proof and the last three months bank statements to show all pensions getting paid in to the account. Bank statements also show lenders the cost off most household bills, other loans you might have and this gives a clear picyure to the secured loan lender or secured loan broker if you can comfortably afford a secured loan.
Al though a secured loan is like a mortgage the two are totally different when it comes to underwriting as the rule with a remortage or mortgage is you can borrow up to five tomes your income but with a secured loan the rule usually is they take 40% of your total income from this they cover your mortgage payments, your other loans and credit card payments and the new secured loan payments. If this is a little short on income they might suggest a bigger loan if you have enough equity to pay your other debt off or they might extend the term of the loan to fit there income calculation.
For more information please visit http://www.championfinance.com
Liz Moir in a experience underwriter in secured loans and remortgages. Champion finance deal with a large panel of lenders for secured loans and the whole of the market for remortgages. for more information visit http://www.championfinance.com
