Secured Debt Consolidation Loan Rates
ABC Finance offer secured debt consolidation loans with market leading broker fees. Get in touch now and get the best deal with ABC Finance.
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Debt consolidation can be a life saver for those who are struggling to keep up the repayments on their financial commitments.
A secured debt consolidation loan is the ideal solution for homeowners in this situation as these products allow borrowers to secure finance at lower interest rates, with lower monthly repayments than unsecured finance.
This is thanks to the low interest rates available on secured debt consolidation loans, combined with the fact that the loan term can be extended up to a maximum of 30 years. In this guide, we break down what the latest rates are, how you can keep the rate charged low and the other fees that you could face on your loan.
What are the latest secured debt consolidation loan rates?
Secured debt consolidation loan rates start at 5.69% per year, when secured against your own home. Fixed rate products start slightly higher than this, as do applications at higher loan to values (LTVs).
For applications secured against buy to let investment properties, rates start at 6.99%. This rate is available for applications up to a maximum of 65% LTV.
How are secured debt consolidation loan rates decided?
Interest rates on this type of secured loan are decided based on several factors. They are:
- The property type
- The loan to value (LTV) required
- The lender chosen
- Whether you are borrowing against your home or an investment property
- Your credit history
- Your income
Fixed vs variable rates – an explanation
Whether your choose to borrow on a fixed rate or variable rate product will have an impact on your interest rate.
Fixed rate products are usually fixed for either 2, 3 or 5 years. During the fixed rate period, your interest rate and monthly payment will not change, even if the Bank of England Base Rate or your lenders variable rates change.
Variable rate products are usually tied to the Bank of England Base rate and increase or decrease in line with Base Rate.
Keep reading – How to consolidate debt or How to consolidate debt with a high debt to income ratio.
Should I choose a fixed rate product?
The choice between fixed and variable is an individual one that boils down to a few factors:
- Do you believe rates will drop and if so, would you prefer to benefit from that?
- If interest rates we’re to climb, would you be comfortable and able to manage that?
- How important is it to you that you secure the lowest interest rate for your loan on day 1?
The answers to all of these will help us to determine which product is the best fit for your needs.
Why are secured loan rates lower than unsecured loan rates for debt consolidation?
Secured finance rates, such as a second charge mortgage, benefit from lower rates than unsecured personal loan rates due to the collateral offered.
By offering the lender security over a property, you reduce the risk to them in the event of default.
Mortgage and loan lenders ultimately price their lending according to risk, so this means they’re able to pass on that cost saving to you as a borrower.
How can I get a lower interest rate?
The best way to get a lower rate on your debt consolidation loan is to keep your loan to value to a minimum.
The lowest interest rates are reserved for applications at the lower LTV levels.
Secured debt consolidation loan fees
On top of the interest charged, you will also face several fees. The main ones are:
Broker fee
By far the biggest fee when arranging a secured debt consolidation loan is the broker fee.
Most secured debt consolidation loan brokers charge high fees of 12.5% of the loan amount, meaning you’ll pay £5,000 on a £40,000 loan.
At ABC Finance, we charge a market leading 5.5% broker fee, capped at £2,195. This would save you £2,805 on a £40,000 loan.
We’re in business to help borrowers who need it and believe in saving people money. That’s why we always look to keep our costs low, our service high and pass on the savings to our customers.
Lender arrangement fee
The next fee is the lender arrangement fee. This fee is generally between £995 to £1,495 and can be added to the loan.
This fee enables you to access the lender’s products and is fixed cost with most lenders.
Valuation fee
While most secured debt consolidation loans don’t require a valuation, occasionally one will be required.
Where an automated or desktop valuation is used, there will be no fee to pay.
Where a physical valuation is required, expect to pay a £3-500 in most cases.
Read more – Debt Consolidation Loans for Bad Credit UK or How can I consolidate debt with bad credit?
Why work with ABC Finance?
At ABC Finance, we offer market leading service and market leading fees, which makes us a pretty strong combination!
That’s why we’re a regular feature at our industry awards and why so many of our clients sing our praises.
We’re a whole of market broker, so work for you to secure the best deal for you, not the lender. If you want somebody to offer honest advice, manage the whole process for you and save you thousands of pounds, get in touch today.
